A dividend trading opportunity for you?
Sainsbury is due to pay a dividend of 3.1p per share/1.0% on Thurs 15 Nov
- The chart shows the Sainsbury share price movements since late August.
- Sainsbury pays a 3.1p/1.0% dividend. Currently at 322.5p (at time of writing).
- Shares -6.6% from 2018 highs; +42.0% from 2018 lows; +33.6% year-to date.
- All CFD positions held over 4.30pm on Weds, 14 Nov will be paid a dividend at 7:15am on Thurs, 15 Nov.
- Those using Sainsbury CFDs receive the dividend 24 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 Sainsbury – An Example
Let’s say you like Sainsbury and would like to get the 3.1p/1.0% dividend. You decide to buy exposure to £10,000 worth of Sainsbury using a CFD, at the current price of 322.5p. 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 Sainsbury shares recover to their pre-dividend share price, your profit from the dividend would be £100, 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 Sainsbury 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.