CFD Trading Strategy


CFD Dividend Trading Strategy - The Basics Explained

Imagine being able to leverage your current dividend trading strategy several times. Smart traders know the power of leveraging their returns in a safe way and now you can learn how to do the same. Today we are going to have a look at some CFD Dividend trading basics and how you can easily secure your dividends whilst trading Contracts for Difference.

CFD Dividends replicate the underlying market which means if a stock you are trading pays a certain dividend then the CFD will pay that amount as well. For example if you bought 1000 CFDs in National Australia Bank (NAB) and it paid a 60 cent dividend then your account would be credited with $600.

Payment dates for CFD Dividends

Regular CFD Traders will know that CFD dividends are paid much sooner that the normal stock market dividends. Your CFD dividend typically gets paid the day after the ex dividend date so long as you held it over the ex-div date.

Multiply your dividend by 3 times using leverage

In order to multiply your returns you need to start leveraging your account and CFDs provide this advantage. Most stocks only require 10% initial margin. As a result of this leverage you can dramatically increase your trading returns.

For example you might normally buy 1000 National Australia Bank shares and receive a $600 credit but with leverage you might buy 3000 NAB shares, which allows you to earn a dividend credit of $1,800. Powerful stuff isn't it.

Do CFDs pay franking credits?

Unlike the normal share market, CFDs do not pay franking credits. 100% fully franked dividends simply mean you wouldn't pay tax on those earnings as the company has already paid the tax. Stock market investors need to own the stock for a full 45 days prior to the ex dividend date in order to receive the franking credits.

Don't let sub standard returns hold you back. Add a Dividend strategy to your CFD trading and watch the increase percentage returns. Knowledge is power but you need to act on this in order to make it happen.


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