Today we’ll go through the superior Three reasons why you need to consider trading CFDs for dividends.
1. You obtain paid your CFD dividend on the ex-dividend date.
You won’t need to wait for payment date
2. You’ll be able to potentially boost your currency markets dividend play 3-5 times standard
3. Investors pave the way to to get a CFD dividend trading strategy
CFD Dividend basics
Let us get quite basics out of the way before discussing the other strategies.
If you possess a CFD you happen to be eligible to the dividend just like in the event you owned the stock providing you own the stock prior to ex-dividend date. Those CFD traders who will be long the CFD will get a credit to the level of the dividend around the ex-dividend date.
Those CFD traders that are short will get a debit to the amount of the dividend and a few CFD brokers within their PDS state they will often deduct the franking credits at the same time (although this is not common in practice).
Franking Credits
CFD traders are certainly not eligible to any franking credits which you may be familiar with for stock market trading. Franking credits are the location where the company has tax taken out which means you don’t need to pay tax on 100% fully franked dividends.
Let’s look into the most notable 3 CFD trading strategies
1. You will get paid your CFD dividend around the ex-dividend date. You don’t have to wait for the payment date
Most CFD brokers will pay the full volume of the dividend marriage ceremony it goes ex-dividend. If you trade the ASX stocks you’d as a rule have to attend for that payment date which is often many weeks later.
2. It is possible to potentially enhance your stock exchange dividend play 3-5 times normal
If your CFD you are trading pays a 5% dividend and you really are trading at 3-5 times leverage then you can definitely potentially supercharge your dividend yield by 3-5 times that amount. As an alternative to receiving 5% you can now earn a dividend yield of 15-25%.
Even though this sounds impressive you need to remember that whenever a stock or CFD pays a dividend it will normally fall the quantity of the dividend. By way of example if Woolworths pays a 65
cent dividend then it will in theory fall 65 cents for the ex-dividend date providing you a capital loss of 65 cents. Which means you make 65 cents around the dividend and lose 65 cents about the capital fall. This leaves you square and brings about the next point…
3. Investors pave the right way to for a CFD dividend trading strategy
Investors love dividends because it provides residual income for next to no effort. Investors also love fully franked dividends along with order to wardrobe around the ASX stock exchange you have to own the stock no less than 45 days ahead of the ex-dividend date.
This will help with an uptrending stock as result of people buying before the ex-div date. Your role from the CFD dividend trading method is to obtain set on confirmation of uptrend of those stocks paying a dividend and selling just prior to the stock going ex-dividend. This means you’ll benefit from the capital gain prior to ex-div date.
Having a CFD dividend trading technique is the best way to enhance your yearly stock exchange returns.
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