Dividends are a distribution of a portion of a company’s earnings to its shareholders. Dividends can be issued as cash payments, shares of stock or other equivalent property.

A dividend causes the share price to fall, as the company is moving money from itself to its shareholders. Dividend payouts from the constituent shares of an index will generally cause the index price to fall. This is because the value of an individual share tends to drop on its ex-dividend date by the amount of the declared dividend. Positive or negative adjustments are applied on Cash Index CFD products to neutralize the impact of the drop in the index price.