A dividend trading opportunity for you?

Softcat is due to pay a dividend of 23.9p per share/3.5% on Thurs 1 Nov

• The chart shows the Softcat share price movements since April.
• Softcat pays a 23.9p/3.5% dividend. Currently at 678p (at time of writing).
• Shares -23.4% from 2018 highs; +35% from 2018 lows; +30.3% year-to date.
• All CFD positions held over 4.30pm on Weds, 31 Oct will be paid a dividend at 7:15am on Thurs, 1 Nov.
• Those using Softcat CFDs receive the dividend 32 days earlier than those using shares.
• On the day the shares trade ex-dividend the share price tends to drop by the same amount.

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Trading Softcat  – An Example

Let’s say you like Softcat  and would like to get the 23.9p/3.5% dividend. You decide to buy exposure to £10,000 worth of Softcat using a CFD, at the current price of 678p. 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 Softcat shares recover to their pre-dividend share price, your profit from the dividend would be £350, 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 Softcat 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.