Earn Double your current stock market dividend returns by using a CFD Dividend Trading Strategy. Would an extra leverage compared to the current amount of dividend credit be useful? I sure hope so. In this article we'll take a look at increasing your returns and how do CFD Franking credits work. Any corporate actions when trading CFDs are simply replicated from the stock market so if a stock you are trading as a CFD pays a dividend then you get a credit to your account accordingly. Owning say 2000 HVN CFDs whilst the stock pays a 20 cent dividend means you will earn $400 on your Contracts for Difference account.

At what point do I get a CFD Dividend credit?

The beauty of trading CFDs for dividends is that you do not have to wait until the payment date like the normal stock market. Your CFD dividend typically gets paid the day after the ex dividend date so long as you held it over the ex-div date.

Discover how to increase your dividends 3 times

The greatest advantage of using CFDs is access to leverage and most providers only require a small margin of say 10% up front. This means you can significantly increase the returns you make trading CFDs. For example you might normally buy 1000 National Australia Bank shares and receive a $600 credit but with leverage you might buy 3000 NAB shares, which allows you to earn a dividend credit of $1,800. Exciting returns aren't they.

Many traders simply forget about the power behind trading share CFDs due to the increased leverage you get. Remember leverage is a double edged sword and words great when you are winning but not so great when you are losing. Always remember to keep your leverage small when starting out and you'll find you stay within a safe risk management guideline. Many new traders tend to get greedy when it comes to leverage and contracts for difference and severly damage their account early one. There is nothing worse than starting off trading with a big win as your confidence gets to the point where you think this is all easy. Well in actual fact it isn't that easy as you need to have sensible risk management in place at all times. This actual applies to any leveraged product and especially so with Contracts for Difference. Especially when implementing a CFD Dividing Trading strategy.

Do the tax benefits of franking credits apply to CFDs?

Unfortunately the CFD market doesn't pay any franking credits. Franking credits simply mean the tax has already been taken into consideration and if you earn a 100% fully franked dividend on the stock market then you don't pay any tax on the returns. CFDs do not receive any franking credits and on the Australian Stock Exchange you need to hold a stock for 45 days to be entitled to the franking credit anyway. Trading CFDs for dividends is a smart way to add value to your existing portfolio and increase your returns. Knowledge is power but you need to act on this in order to make it happen.

Now it's time to create a plan and build your cfd trading business into something that makes you money time and time again. Every successful business has a plan that they refer to and depend on in order to steer their ship to safety. Even if you create just a basic trading plan it'll be better than nothing and put you miles in front of your trading competitors.

Author's Bio: 

To see what a Simple and Effective CFD Trading Strategy actually looks like and one that can greatly assist you in achieving your financial dreams go to www.ultimatecfdtradingsystem.com Discover how you can deliver superior returns from anywhere in the world whilst living your dream life.