CFDs and dividends

[david27]

Could somebody please let me know how dividends work in regard to CFD's. When do you have to buy the CFD to be eligible for the dividend, before the ex-div date or before the record date?

For example WBC interim dividend of 56c goes ex dividend today 18/05/09 however the record date is 22/05/09. When would the CFD need to be bought in order to receive this dividend?

Also how does it work the other way around. Would it be possible to short a stock the day before it goes ex div then sell it on the ex div day without having to pay the dividend?

 

[Aussiest]

You need to buy the CFD before the ex-dividend date. When you are shorting a CFD, you will need to sell it the day (or any day) before the ex-dividend date and then buy it back on the ex-dividend date or after.

 

[cooper1308]

Also how does it work the other way around. Would it be possible to short a stock the day before it goes ex div then sell it on the ex div day without having to pay the dividend?

Nope you'll have to pay out all divs for which you are short.

 

[Aussiest]

Arp, sorry, forgot to mention you will have to pay dividend if you are short. Some people sell the instrument with the expectation that SP will go down, and that they will therefore make a profit ex-dividend. Mis-read your post.