Index Dividend Adjustment

An index dividend adjustment is a cash entry a broker posts when constituent companies of a stock index go ex-dividend. On the ex-dividend date the share price typically drops by roughly the dividend amount, which mechanically pulls the index lower even though nothing has changed about the underlying businesses. Because holders of an index CFD do not own the shares and receive no dividends, brokers neutralise that mechanical fall: long positions are credited an amount reflecting the weighted dividends and short positions are debited. The adjustment applies to cash index CFDs rather than futures-based ones, where expected dividends are already priced into the forward. It shows up separately on the statement, not as trading profit.