A dividend trading opportunity for you?

Redrow is due to pay a dividend of 19p per share/3.2% on Thurs, 20th Sept

• The chart shows the last 6 months share price movements on Redrow
• 6 month lows 514p; 6-month highs 651p. Currently at 592p (at time of writing).
• All CFD positions held over 4.30pm on Weds 19 Sept will be paid the dividend at 7.15am on Thurs 20th
• On the day the shares trade ex-dividend, CFDs receive the full dividend amount
• Those using Redrow CFDs receive the dividend 54 days earlier than those in shares

Click to enlarge

Trading Redrow – An Example

Let’s say you like Redrow, and would like to get the dividend. You decide to buy exposure to £10,000 worth of Redrow using a CFD, at the current price of 592p. To do this, you need £2,000.

For the purpose of this example, let’s assume Redrow pays a dividend of 3.2%. Shares that go ex-dividend typically fall by the amount of the dividends. Many shares then tend to recover over a period of time, helped by dividends being reinvested, creating a dividend recovery trade opportunity

Assuming Redrow shares recover to their pre-dividend price, your profit from the dividend would be £320, 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 Redrow 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.