CFDs

Guide: General Information

Corporate Actions

With the exception of shareholder rights, corporate actions in the underlying stock are generally reflected in the CFD. Most providers pay the net dividend declared by the company (currently 90% of the gross) and for most taxpayers there is no opportunity loss in holding the CFD rather than the stock. Indeed it is often forgotten that the holder of a long CFD is generally credited with the dividend on the Stock Exchange ex-dividend date for that share rather than the pay date, which can be several months later, which is a substantial advantage in terms of cash flow. Short positions can expect to be debited 100% of the gross dividend declared, and similarly must be paid on the ex-dividend date as, all other things being equal, the share would be expected to fall by that amount on that date. Likewise, stock splits, bonus issues and rights issues are all reflected in the CFD on the corresponding 'ex-date'.

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