Dividend

A payment a company chooses to make to the holders of its shares, in cash or occasionally in additional shares. It is declared by the board rather than owed, so the amount can be raised, cut or cancelled, and a long record of payments creates an expectation rather than an entitlement. Profits that are not distributed are retained inside the company instead.

Four dates govern one payment. The declaration date is when the board announces it. The ex-dividend date is the first day on which the shares change hands without the entitlement attached. The record date fixes who is on the register, and the payment date is when the money arrives. The ex-dividend date is the one visible on a chart: the price customarily opens lower by approximately the amount being paid, because the entitlement has left the share and the company is about to be that much smaller.

Entitlement follows the register, and a contract for difference does not put anybody on a register. A holder of a share CFD therefore receives no dividend from the issuer and instead meets a dividend adjustment applied by the provider, which is a different thing arriving from a different party. Funds handle the same cash flow in one of two ways, distributing what their holdings pay or accumulating it back into the fund.