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 on AAPL CFD positions if they are closed before the market closes on May 7, 2020. Likewise, any new AAPL CFD positions opened after the market opens on May 8, 2020, will not be affected.
For example:
If you bought and held 100 Apple Inc. share CFDs at the close of trading on May 7, 2020, you would be entitled to a dividend payment of $0.82 per share × 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 sold and held -100 Apple Inc. share CFDs at the close of trading on May 7, 2020, you would be deducted $0.82 per share × 100 = $82 USD.
The adjustment made on 08/05/2020:
Debit: Gross dividend payment 82 USD
On the market open of the ex-dividend date, the underlying share price typically adjusts downward by an amount roughly equal to the dividend. This reflects the fact that new buyers will not receive the dividend, and the stock price naturally accounts for this payout to existing shareholders.