Today we’ll discuss the top 3 reasons why you ought to consider trading CFDs for dividends.
1. You will get paid your CFD dividend on the ex-dividend date.
You don’t have to wait for payment date
2. You are able to potentially improve your stock market dividend play 3-5 times the norm
3. Investors pave the way to for the CFD dividend trading strategy
CFD Dividend basics
Let’s get quite basics off the beaten track before discussing the other strategies.
If you possess a CFD you happen to be eligible for the dividend just like if you owned the stock offering you own the stock prior to the ex-dividend date. Those CFD traders that are long the CFD gets a credit for the volume of the dividend on the ex-dividend date.
Those CFD traders who will be short will receive a debit for the level of the dividend and a few CFD brokers within their PDS state they could deduct the franking credits at the same time (even though this is not common in reality).
Franking Credits
CFD traders usually are not eligible for any franking credits which you might be used to for stock market trading. Franking credits are the location where the company has tax removed so you don’t have to pay tax on 100% fully franked dividends.
Let’s check out the Top 3 CFD trading strategies
1. You obtain paid your CFD dividend for the ex-dividend date. You don’t have to wait for payment date
Most CFD brokers can pay the actual full amount of the dividend at the time it’s going ex-dividend. Should you trade the ASX stocks you would usually have to hold back to the payment date which can be many weeks later.
2. You’ll be able to potentially improve your currency markets dividend play 3-5 times standard
In the event the CFD you happen to be trading pays a 5% dividend and you’re trading at 3-5 times leverage then you can certainly potentially supercharge your dividend yield by 3-5 times that quantity. Rather than receiving 5% anyone can earn a dividend yield of 15-25%.
Although this sounds impressive you need to remember that whenever a stock or CFD pays a dividend it’ll normally fall the volume of the dividend. For example if Woolworths pays a 65
cent dividend then it will theoretically fall 65 cents around the ex-dividend date providing you with a capital loss in 65 cents. So you make 65 cents on the dividend and lose 65 cents about the capital fall. This leaves you square and results in the next point…
3. Investors pave how you can for any CFD dividend trading strategy
Investors love dividends mainly because it provides residual income for next to no effort. Investors also love fully franked dividends plus order to get that for the ASX stock exchange you should own the stock no less than 45 days prior to the ex-dividend date.
This will help with an uptrending stock due to people buying before the ex-div date. Your role in the CFD dividend trading method is to obtain set on confirmation of uptrend of people stocks paying a dividend and then sell just prior to the stock going ex-dividend. Therefore you’ll take advantage of the capital gain prior to ex-div date.
Employing a CFD dividend trading method is the best way to improve your yearly stock trading game returns.
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