What CFD Traders Should Know About Dividends

Dividends are a subject that is sometimes overlooked by CFD traders.

However, there are several facts about dividends that any trader should know because they affect the way stocks behave on certain dates.

In this CFD basics post, we cover everything a CFD trader needs to know about dividends.

Yes, CFDs on shares do pay dividends

Just a like a stock, if you own a CFD you will receive a dividend if you own it the day before the ex-dividend date (more on that later). On the dividend payment date, an amount equivalent to the dividend for each share you have exposure to will be paid into your trading account. However, you may also find that the stock price falls by a similar amount to the dividend on the ex-dividend date.

No, CFDs on indices and index futures don’t pay dividends.

Futures are priced slightly differently, and the dividend is excluded from the price of a future when it is traded. Cash indices themselves are not traded and don’t pay dividends, so cash index CFDs are usually based on index futures. Indexes are affected slightly when index constituents pay a dividend, but the effect is barely noticeable.

Important dates to know about with regard to dividends

When a company pays a dividend, a sequence of events takes place according to a schedule. This is to ensure that the dividends are paid to the right shareholders.

Declaration date: Firstly, the company will announce the amount of the dividend and the relevant dates. This often happens on the same day the company announces its results.

Last date to trade: This is the last day you can buy a share and still receive the dividend.

Ex-dividend date: On the day after the last day to trade, the share trades without the dividend. If you buy a share on this day you will not receive a dividend.

Record date: The record date is the same as the settlement date for trades that took place on the last day to trade. Anyone that owns a share on this day will receive the dividend. This date is after the ex-div date because trades take a few days to settle.

Payment date: Dividends are paid on the payment date which is usually a few days after the record date.



How to incorporate dividends in your trading

While dividends are usually the focus of long-term investors, traders can also earn dividends and incorporate dividends in their trading plan.

Dividend stripping is the practice of earning dividends by only owning a share for a few days. When a share trades ex-dividend, buyers are no longer entitled to dividends, so the share price should fall by exactly the amount of the dividend. You may notice that on an ex-div date, the whole CFD spread for a share falls a percentage or two. In reality, the stock price usually drops less than the dividend. If that does happen, you can profit by buying the share (or a CFD) with the best dividends on the last day to trade and selling on the ex-div date. You will make a loss on the shares but will end up with a small profit when you receive the dividend.

Sometimes the market forgets a share is trading ex-div, and the price doesn’t immediately fall at all. In that case, a profit can be made by shorting the share – provided the dividend is large enough to cover trading costs.

What dividends can tell you about a company’s health

Companies pay dividends out of their profits. The dividend is usually a fixed percentage (about a third) of the company’s earnings per share. Analysts forecast dividends, along with earnings and revenues for each company. The average analyst forecasts for dividends can be found on a dividend forecast schedule.

When the dividend is declared, it will either be in line, above or below forecasts. If the dividend is well ahead of the analyst forecast this is positive. If the company’s dividend is beginning to grow consistently, dividend growth investors will take notice and the share price may appreciate.

If the dividend is below expectations, this may signal bad news. For a start, it means the company is not doing as well as analysts thought. Dividends are paid in real cash, while earnings are really just a book entry and can be manipulated. So, if earnings are still increasing, but dividend are not, the company may have a cash flow problem. These are all pieces of information that can tell us more about a company.


Traders often don’t pay much attention to dividends. However, it’s good to know how they are paid out so that you can check when you are receiving them. It’s also good to be aware that a stock might bounce ahead of an ex-div date, and then fall on the day it trades ex-dividend.

All content is provided for your information only.

This article may contain opinions and is not advice or a recommendation to buy, sell or hold any investment. No representation or warranty is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however we have put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.

One Financial Markets expressly disclaims all liability from actions or transactions arising out of the usage of this content. By using our services, you expressly agree to hold One Financial Markets harmless against any claims whatsoever and confirm that your actions are at your sole discretion and risk.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    EC2A 2BN
    United Kingdom

    T:  + 44 ( 0 ) 203 857 2000
    E:  info@ofmarkets.com
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    United Arab Emirates
    T: + 971 44 22 888
    E:  info@ofmarkets.com

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: