A dividend trading opportunity for you?

HSBC is due to pay a dividend of 10c per share/1.1% on Thurs 11 Oct

• The chart shows the HSBC share price movements since early August.
• HSBC pays a 10c/1.1% dividend. Currently at 669.4p (at time of writing).
• Shares -16% from 2018 highs; +4.1% from 2018 lows; +12.7% year-to date
• All CFD positions held over 4.30pm on Weds, 10 Oct will be paid a dividend at 7:15am on Thurs, 11 Oct.
• Those using HSBC CFDs receive the dividend 30 days earlier than those using shares.
• On the day the shares trade ex-dividend the share price tends to drop by the same amount

Click to enlarge

Trading HSBC – An Example

Let’s say you like HSBCand would like to get the 10c/1.1% dividend. You decide to buy exposure to £10,000 worth of HSBCusing a CFD, at the current price of 669.4p. To do this, you need £2,000.

Shares that go ex-dividend typically fall by the amount of the dividend on the ex-dividend date. Many shares then tend to recover over a period of time, helped by dividends being reinvested, creating a dividend recovery trade opportunity.

Assuming HSBC shares recover to their pre-dividend share price, your profit from the dividend would be £110, from your initial investment of £2,000.

Be aware that the share price could fall or rise, which could mean that you make an overall loss or increased profit on the position. For example, let’s assume that HSBC falls 2% at the same time it pays the dividend. You overall net loss on your £10,000 position would be £200.

This is provided for information purposes only. It should not be taken as a recommendation.