Corporate actions

Dividends describe a company’s payment to shareholders on a per-share basis to all holders. A dividend is usually a portion of a company's profits, which it chooses to pay out to shareholders rather than reinvest in the firm.

On the declaration date, a company’s board of directors announces the intention to pay a dividend on a specified future date.

On this date, shares already bought and sold lose the right to be paid the most recently declared dividend. Subsequently, the value of the stock falls by the value of the dividend amount, as holders of the company's shares are no longer entitled to the dividend.

Stock dividends are similar to cash dividends, except the dividend is paid out as additional shares instead of cash. When holding a CFD position in a stock issuing a stock dividend at OANDA, your position will be cash adjusted in the same way.

A bonus issue is where a company issues additional free shares to existing shareholders. It is similar to a stock dividend, but the funding for the bonus issue comes from a company’s retained earnings or capital instead of income.

If a stock’s price gets too high, some investors might become priced out of purchasing a stock. As a result, companies sometimes issue a “stock split” to reduce the stock price.

A rights issue is where a company offers its existing shareholders the chance to purchase newly issued shares, typically at a discounted price. Companies use this as a way of raising additional capital. At OANDA, we will sell the rights issue shares automatically and provide a cash adjustment to your account for the value of the rights issue.

A merger or acquisition is where one company agrees to purchase the other, or agrees to merge with another. In these cases, we will close out any relevant positions at the resulting entitlement’s price and cash-settle to the equivalent price.

A spin-off is where a parent company distributes shares of a subsidiary to the shareholders of the parent such that this subsidiary becomes an independent company. At OANDA, we will sell the spin-off shares automatically and provide a cash adjustment to your account for the value of spin-off shares.

Dividends on some share CFDs may be subject to taxes, depending on the jurisdiction where the stock is listed. Tax treatment of dividends can differ depending on your location if tax treaties are in place.

Companies raise money by issuing shares. Initial stock offering (IPO) is how companies get listed on the stock exchange. A company uses the capital it raises through an IPO to generate income. Once it starts trading, the issuing company no longer receives money from trades. Out in the open market, the stock price fluctuates as its perceived value changes over time