Severn Trent is due to pay a dividend of 37.4p per share/2.0% on Thurs 29 Nov

• The chart shows the Severn Trent share price movements since May.
• Severn Trent pays a 37.4p/2.0% dividend. Currently at 1895p (at time of writing).
• Shares -12.2% from 2018 highs; +15.0% from 2018 lows; -12.5% year-to date.
• All CFD positions held over 4.30pm on Weds, 28 Nov will be paid a dividend at 7:15am on Thurs, 22 Nov.
• Those using Severn Trent CFDs receive the dividend 27 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  Severn Trent – An Example

Let’s say you like Severn Trent and would like to get the 37.4p/2.0% dividend. You decide to buy exposure to £10,000 worth of Severn Trent using a CFD, at the current price of 1895p. 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  Severn Trent shares recover to their pre-dividend share price, your profit from the dividend would be £200, 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 Severn Trent 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.