Dividends & Other Corporate Actions
Corporate Actions include dividend payments, rights issues, stock splits or mergers and acquisitions.
These events and their effect on the underlying security are reflected in the CFD market, so corporate actions will effect your bottom line as a trader. You should consult a corporate action calendar before taking a position in a CFD.
Let’s take a look at how each of the corporate actions affect your CFD position:
Dividends
If you have a long share CFD position your account will receive a cash adjustment equivalent to the cash dividend or distribution declared. It is important to remember that you will receive any adjustment for any franking credits attached to the dividend.
If you hold a short share CFD position, you account will be adjusted downwards for the Grossed up dividend (that is the sum of the cash dividend plus any attached franking credits).
Rights Issues & Stock Splits
Rights issues and stock splits are usually reflected in a cash adjustment to your CFD account or as an adjustment to the size of the CFD position you hold.