Learn about CFDs and Dividends

Share CFDs offer traders many of the benefits of owning physical shares (except for voting rights and franking credits), with the benefit of avoiding the costs and obligations linked to physically owning the shares.

If you hold a long CFD position over the date the share goes ex-dividend you will be entitled to receive the dividend income, less any franking credits.

The dividend paid by the company less franking credits are going to be credited to your account on the following business day after the ex-dividend date of the underlying stock on which the CFD is based. Conversely, in the event you hold an open sold CFD, your account are going to be debited an amount equal to the dividend plus franking credits on business day after the ex-dividend date.

This ensures that if you held the shares on the 1st August but sold them on the 2nd August you would still be entitled to the dividend income. But if you bought the shares on the 2nd of August or later, no dividend would be paid.

It is necessary for individuals who are considering using CFDs as a method of investing in shares to determine the dividend policy of every CFD broker. Not all providers are identical and this may affect the investment outcomes.

Investigate whether you are able to participate in dividend payments, and also other corporate actions e.g. rights issues, bonus issues, subdivisions, consolidations, reclassifications and other similar events.

Article Source: http://gamblingarticlessite.com

John Masterton is a professional CFD trader trading with Australia's largest and most popular CFD broker, IC Markets. John has published a number of articles on CFD education including guides and ebooks which you can download for free.

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