Today we’ll look at the superior 3 reasons why you should consider trading CFDs for dividends.
1. You receive paid your CFD dividend on the ex-dividend date.
You won’t need to wait for payment date
2. You can potentially supercharge your currency markets dividend play 3-5 times normal
3. Investors pave how you can for any CFD dividend trading strategy
CFD Dividend basics
Let us get the key basics dealt with before discussing the other strategies.
In case you own a CFD you happen to be entitled to the dividend equally as in case you owned the stock offering you own the stock prior to ex-dividend date. Those CFD traders who’re long the CFD get a credit to the level of the dividend about the ex-dividend date.
Those CFD traders who are short will receive debit to the level of the dividend and some CFD brokers inside their PDS state they might deduct the franking credits too (even though this is not common used).
Franking Credits
CFD traders are not entitled to any franking credits which you may be familiar with for stock trading. Franking credits are the place that the company has tax removed and that means you don’t have to pay tax on 100% fully franked dividends.
Let’s have a look at the most notable 3 CFD trading strategies
1. You receive paid your CFD dividend about the ex-dividend date. You don’t need to wait for an payment date
Most CFD brokers can pay the particular full level of the dividend right then and there it goes ex-dividend. In the event you trade the ASX stocks you would normally have to wait for the payment date which can be weeks later.
2. You can potentially enhance your currency markets dividend play 3-5 times typical
If the CFD you happen to be trading pays a 5% dividend and you really are trading at 3-5 times leverage then you can potentially boost your dividend yield by 3-5 times that quantity. As an alternative to receiving 5% anyone can earn a dividend yield of 15-25%.
Even if this sounds impressive you should remember that every time a stock or CFD pays a dividend it’ll normally fall the volume of the dividend. As an example if Woolworths pays a 65
cent dividend it will theoretically fall 65 cents around the ex-dividend date giving you a capital loss of 65 cents. Which means you make 65 cents for the dividend and lose 65 cents about the capital fall. This leaves you square and results in another point…
3. Investors pave the right way to to get a CFD dividend trading strategy
Investors love dividends as it provides re-occurring income for next to no effort. Investors also love fully franked dividends and in to obtain that about the ASX currency markets you need to own the stock at least 45 days prior to ex-dividend date.
This can give rise to an uptrending stock due to people buying ahead of the ex-div date. Your role inside the CFD dividend trading method is to obtain focused on confirmation of uptrend of these stocks paying a dividend and selling before the stock going ex-dividend. This means you’ll make use of the capital gain ahead of the ex-div date.
Using a CFD dividend trading approach is a powerful way to improve your yearly currency markets returns.
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