A dividend trading opportunity for you?

Close Bros is due to pay a dividend of 42p per share/2.7% on Thurs 11 Oct

• The chart shows the Close Bros share price movements since August 2017.
• Close Bros pays a 42p/2.7% dividend. Currently at 1563p (at time of writing).
• Shares -7.8% from 2018 highs; +11.5% from 2018 lows; +7.9% 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 Close Bros CFDs receive the dividend 29 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 Close Bros – An Example

Let’s say you like Close Bros and would like to get the 42p/2.7% dividend. You decide to buy exposure to £10,000 worth of Close Bros using a CFD, at the current price of 1563p. 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 Close Bros shares recover to their pre-dividend share price, your profit from the dividend would be £270, 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 Close Bros falls 3% at the same time it pays the dividend. You overall net loss on your £10,000 position would be £300.

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