A dividend trading opportunity for you?
Compass Group is due to pay a dividend of 25.4p per share/1.5% on Thurs 17 Jan
- The chart shows the Compass share price movements since late August.
- Compass pays a 25.4p/1.5% dividend. Currently at 1673p (at time of writing).
- Shares -3.9% from 2018 highs; +18.5% from 2018 lows; +1.5% year-to date
- All CFD positions held over 4.30pm on Weds, 16 Jan will be paid a dividend at 7:15am on Thurs, 17 Jan.
- Those using Compass CFDs receive the dividend 28 days earlier than those using shares.
- On the day the shares trade ex-dividend the share price tends to drop by the same amount
Trading Compass Group – An Example
Let’s say you like Compass, and would like to get the 25.4p/1.5% dividend. You decide to buy exposure to £10,000 worth of Compass using a CFD, at the current price of 1673p. 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 Compass 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 Compass 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.