FTSE Dividend Recovery
A dividend trading opportunity for you?
FTSE companies which paid dividends on Thurs 27 Jun: British Land, Burberry Group, British American Tobacco, Caledonia Investments, Experian, Fidelity China Special Situations, JD Sports Fashion, Paypoint
FTSE companies which paid dividends on Thurs 20 Jun: B&M European Value Retail, Big Yellow Group, Cineworld, Compass, Land Securities, NewRiver REIT, Stobart, Tate & Lyle, TR Property Investment Trust, United Utilities
Source: Bloomberg; Last updated: 27 Jun 2019
- Shares typically fall by the amount of the dividend being paid. Many shares then tend to recover over a period of time, helped by dividends being reinvested, creating a dividend recovery trade opportunity.
- Our table highlights whether the shares have fallen further following the dividend payment (net loss), or whether they have, in fact, begun to recover and close the gap (net profit).
- * Yields relate to that particular dividend as percentage of ex-div share price, not the annual yield.
Trading Persimmon – An Example
Let’s say you like Persimmon and would like to get the 110p/5.4% dividend. You decide to buy exposure to £10,000 worth of Persimmon using a CFD. 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 Persimmon shares recover to their pre-dividend share price, your profit from the dividend would be £540, 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 Persimmon 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.