Dividend Adjustments

Listed companies regularly distribute dividends to shareholders. Following the ex-dividend date, the share price per share typically declines by an amount roughly equivalent to the cash dividend per share. As stock price indices are calculated using a weighted average of constituent shares, a fall in the price of an individual stock within the index will cause the index itself to decline. The magnitude of this decline depends on the weight assigned to that stock within the index.

Certain indices employ price-weighted calculations, using the arithmetic means of the total sample stock prices, such as the Dow Jones Industrial Average. Other indices utilise market capitalisation weighing, where the index value is calculated using the total market capitalisation as the weighting factor – derived by multiplying the total number of outstanding shares by each stock's price, as exemplified by the S&P 500 Index. We calculate the projected impact of dividends on indices based on each constituent's weighting and publish these figures weekly on our website. Dividend adjustments typically occur on the ex-dividend date.

As you are trading CFDs and do not physically hold the underlying shares within the index, you will neither receive (when holding a long position) nor pay (when holding a short position) dividends from the constituent stocks. To ensure you do not incur unjustified profits or losses due to price movements on ex-dividend dates or missed dividends, we implement dividend adjustments. Holders of long positions in the index may receive a post-tax dividend adjustment, while holders of short positions may pay a post-tax dividend adjustment.

Examples of Dividend Adjustments

For example: You hold 1 contract of the Dow Jones Industrial Average, and on 7 June, the Travelers Companies Inc. announced a dividend of USD$3.08 per share.

We will calculate the impact of this ex-dividend date on the index based on Travelers Companies Inc.’s weighting within the Dow Jones Industrial Average, determining it to be 5.302 points. Depending on whether you hold a long or short position, this 5.302 points will be converted into US dollars and either credited to your account or deducted from it.

We calculate the dividend's projected impact on the index based on each constituent's weighting and publish these figures weekly on our website.

Dividend adjustments typically occur on the ex-dividend date. Long positions in the index receive the after-tax dividend adjustment, while short positions incur the after-tax adjustment, ensuring you incur no unjustified profit or loss from price movements on the ex-dividend date or missed dividends. Please refer to the following table for this week's projected dividend adjustment figures: