Dividend payment is by far the most common type of corporate action. Profitable companies may issue several dividend payments a year. Typically, an ex-dividend date will be announced when dividends are issued. For example, the last ex-dividend date for Apple Inc. (AAPL) is 8th May 2020, with a dividend amount of $0.82 USD per share. If you have held a CFD position of Apple Inc. (AAPL) on our platform at the close of trading on 7th May 2020, an adjustment to your position(s) will be made to account for this dividend payment.
There will be no dividend related impact if the AAPL CFD position(s) are closed before market close on 7th May 2020. Similarly, new AAPL CFD positions opened after the market open on 8th May 2020, will also not be impacted.
For example:
If you have bought and held 100 Apple Inc. shares CFDs at the close of trading on 7th May 2020, you will be entitled to 0.82 per share x 100 = 82 USD.
Under US taxation laws, 30% of any dividend income in relation to equities and equity derivatives will be withheld, which is 82 USD x 30% = 24.6 USD
The two adjustments made on 08/05/2020:
Credit: Gross dividend payment 82 USD
Debit: Withholding tax amount 24.6 USD
Alternatively:
If you have sold and held -100 Apple Inc. Share CFDs at the close of trading on 7th May 2020, you will be deducted 0.82 per share x 100 = 82 USD.
The adjustment made on 08/05/2020:
Debit: Gross dividend payment 82 USD
On the market open of ex-dividend date, the underlying share price is generally expected to fall by a similar magnitude to the dividend amount.