A dividend trading opportunity for you?

Morrison’s is due to pay a dividend of 3.85p per share/1.5% on Thurs, 27th Sept

• The chart shows the last month’s of Morrison’s share price movements.
• Morrison’s pays a 3.85p dividend. Currently at 257.7p (at time of writing).
• Shares -5.0% from 2018 highs; +26.4% from 2018 lows; +17.2% year-to date
• All CFD positions held over 4.30pm on Weds, 26 Sept will be paid a dividend at 7:15am on Thurs, 27 Sept.
• Those using Morrison’s CFDs receive the dividend 39 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 Morrison’s – An Example

Let’s say you like Morrison’s, and would like to get the 3.85p/1.5% dividend. You decide to buy exposure to £10,000 worth of Morrison’s using a CFD, at the current price of 257.7p. 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 Morrison’s shares recover to their pre-dividend share price, your profit from the dividend would be £150, 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 Morrison’s falls 5% at the same time it pays the dividend. You overall net loss on your £10,000 position would be £500.

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