Help CenterWhat are Dividends?
Dividends are a portion of a company’s profits paid to shareholders. They are typically distributed either as cash payments or additional shares. In the case of indices like the ones listed above, the dividends from the underlying companies that make up the index can affect the index price and, consequently, your CFD trades.
When trading CFDs on indices, dividends are applied as adjustments on positions you hold:
- If you hold a long position (buy): You will receive a dividend payment credited to your account.
- If you hold a short position (sell): A dividend charge will be debited from your account.
Dividends and Your CFD Trading
In CFD trading, dividends can affect the value of your open positions, especially if you are trading indices that include dividend-paying stocks. These adjustments are made on the ex-dividend date – the day when dividends are declared, and only those holding positions by the end of this day will be eligible for dividend credits or debits.
At Brisk Markets, we offer a range of CFD products that allow you to trade popular global indices, including:
- US30 (Dow Jones Industrial Average)
- UT100 (Nasdaq 100)
- US500 (S&P 500)
- AUS200 (Australian S&P/ASX 200)
- DE30 (German DAX 30)
- EU50 (Euro Stoxx 50)
- FRA40 (CAC 40 - France)
- HK50 (Hang Seng Index - Hong Kong)
- UK100 (FTSE 100 - United Kingdom)
- JP225 (Nikkei 225 - Japan )
- ESP35 ( Spanish Index 35 )
Dividend Calculation for Long and Short Positions
The formula used to calculate the dividend adjustment for both long and short positions is as follows:
For Long Positions (Buy):
Dividend Adjustment (Long)= Shares × Dividend per Share
For Short Positions (Sell):
Dividend Adjustment (Short)=− ( Shares × Dividend per Share )
- Long Position: You receive the dividend amount as a positive adjustment.
- Short Position: You are charged the dividend amount, resulting in a negative adjustment.
Example: Dividend Adjustment on UT100
Let’s use the UT100 (Nasdaq 100) as an example to show how the dividend adjustment works.
Dividend: 2.122 points
For Long Positions (Buy):
If you hold a long position on UT100, you will receive the dividend adjustment. The adjustment is calculated as follows:
Assume you hold 10 contracts Long. The calculation would be:
- Dividend Adjustment (Long) = 10 × 2.122 = 21.22
- So, a total of 21.22 points would be credited to your account.
For Short Positions (Sell):
If you hold a short position on UT100, you will be charged the dividend adjustment. The calculation is similar but results in a deduction:
Assume you hold 10 contracts Short. The calculation would be:
- Dividend Adjustment (Short) = −(10 × 2.122) = −21.22 points
- So, a total of 21.22 points would be debited from your account.
Summary of Example:
- For Long Positions: You will be credited 21.22 points.
- For Short Positions: You will be charged 21.22 points.
Upcoming Dividend Adjustments for Indices
The following table provides the upcoming dividend adjustments for both long and short positions on the indices offered by Brisk Markets:
Note 1 : Dividend adjustments may vary depending on market conditions and corporate announcements. This table is updated regularly, so please check back for the latest information.
Note 2 : Expected dividend adjustments are stated in full index points per contract. Figures stated are forecast amounts sourced via our liquidity providers. The final adjustment may differ from the forecast amount previously displayed.
Why Dividend Adjustments Matter in CFD Trading
Dividends can play a significant role in CFD trading, especially with indices that consist of dividend-paying companies. For long positions, dividends can add extra profit to your account, whereas short positions may incur additional costs. Understanding when and how these dividend adjustments will occur can help you make more informed trading decisions.
If you have any questions about dividend adjustments on your trades, please don’t hesitate to contact our support team for more details.