Today we’ll look at the very best Three reasons why you need to consider trading CFDs for dividends.
1. You will get paid your CFD dividend around the ex-dividend date.
You don’t have to wait for an payment date
2. You are able to potentially enhance your stock trading game dividend play 3-5 times standard
3. Investors pave how you can for a CFD dividend trading strategy
CFD Dividend basics
Why don’t we get quite basics off the beaten track before discussing the other strategies.
If you own a CFD you happen to be permitted the dividend in the same way in case you owned the stock providing you with own the stock ahead of the ex-dividend date. Those CFD traders that are long the CFD gets a credit towards the quantity of the dividend about the ex-dividend date.
Those CFD traders who are short will receive a debit for the quantity of the dividend and a few CFD brokers of their PDS state they will often deduct the franking credits as well (even though this is not common used).
Franking Credits
CFD traders usually are not permitted any franking credits that you might be familiar with for stock trading. Franking credits are where the company has tax taken out so that you don’t need to pay tax on 100% fully franked dividends.
Let’s take a look at the Top 3 CFD trading strategies
1. You get paid your CFD dividend on the ex-dividend date. It’s not necessary to wait for a payment date
Most CFD brokers will probably pay the full quantity of the dividend on the day it goes ex-dividend. Should you trade the ASX stocks you’ll usually have to attend to the payment date which may be a few months later.
2. You can potentially improve your stock trading game dividend play 3-5 times the norm
If the CFD you happen to be trading pays a 5% dividend and you’re simply trading at 3-5 times leverage then you can potentially supercharge your dividend yield by 3-5 times that quantity. Rather than receiving 5% you can now earn a dividend yield of 15-25%.
Of course this sounds impressive you need to keep in mind that whenever a stock or CFD pays a dividend it’ll normally fall the amount of the dividend. For instance if Woolworths pays a 65
cent dividend then it will the theory is that fall 65 cents about the ex-dividend date giving you a capital decrease of 65 cents. So that you make 65 cents about the dividend and lose 65 cents on the capital fall. This leaves you square and results in the next point…
3. Investors pave the way to for any CFD dividend trading strategy
Investors love dividends as it provides walk away income for next to no effort. Investors also love fully franked dividends along with to wardrobe on the ASX stock market you should own the stock at least 45 days ahead of the ex-dividend date.
This will give rise to an uptrending stock as result of people buying prior to the ex-div date. Your role in the CFD dividend trading approach is to obtain set on confirmation of uptrend of people stocks paying a dividend and then sell right before the stock going ex-dividend. This means you’ll take advantage of the capital gain ahead of the ex-div date.
Employing a CFD dividend trading strategy is the best way to improve your yearly currency markets returns.
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