How to get Dividends on eToro

TutorialsDecember 23, 2021

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First, we must know that dividend trading works mainly for US stocks. The European market is not generous in dividends (pays no dividends or pays very little).

What are dividends?

Before learning about dividend payment regulations on eToro, we need to understand what a dividend concept is?

A dividend is an amount that a company periodically pays to shareholders, in addition to dividends or reserves.

Dividends are distributed based on the capital contributed by each shareholder in the company, giving them a certain amount of money per share they own. 

For example, if Apple announced a dividend of $0.80 per share, the shareholder with 50 shares would receive $40.

There are four important dates in the dividend process:

  • Announcement Date: The company’s management announces its intention to pay dividends. The Board of Directors also announces the dividend value, ex-dividend date, and dividend payment date.
  • Ex-dividend Date: if trading on this day or after this date, the buyer will not be entitled to the dividend. Only owners of shares before the ex-dividend date will receive dividends.
  • Record Date: When the company checks the records to see who is eligible to receive the dividend. The record view date is one business day after the ex-dividend date.
  • Dividend Date: When dividends are paid to shareholders of the company.

Therefore, it is necessary to monitor the ex-dividend date to avoid the case of not receiving dividends.

In addition, for stocks listed on any exchange, we look up the dividend schedule on that floor. Note that you need to look up the information correctly to ensure that you receive dividends

Does eToro pay dividends?

Yes.

Dividends may be added to or deducted from your account if the account is trading a dividend-paying stock, ETF, or index.

  • If you hold a BUY position, you will receive the dividend paid directly to your available balance. For Leveraged trades, eToro DOES pay dividends.
  • If you hold a SELL position, the dividend payment will be deducted from your available balance.
  • For Leveraged trades, eToro DOES calculate dividends.

The dividend date is added (minus) on eToro.

It would be best if you held the position before the market opens on the ex-dividend date for the dividend payment to apply.

  • If you own a CFD position, the dividend will be added (subtracted) to your available balance on the ex-dividend date.
  • If you own a position backed by real assets (Currently US stocks, no leverage), you will receive a dividend payment on your available balance on the settlement date.

How much tax is withheld from my dividends?

Receiving dividends is a taxing event in some cases and some jurisdictions. The tax withheld by eToro depends on various factors and can vary from the chance to point.

Dividends paid on US stocks and ETFs.

In general, the tax withholding for cash dividends paid by a US corporation is 30%. In cases where adequate affiliate income (ECI) is produced, the tax rate will be 37%.

Dividends paid on non-US stocks and ETFs.

The percentage of tax withheld depends on the country of origin’s laws.

Defining a stock’s country of origin for tax purposes is complicated, as it varies from country to country. It can be the country of incorporation of the company issuing the dividend or effectively managed and controlled. In cases where a company is considered a taxpayer of more than one country, applicable tax treaties will determine which country has the right to levy the tax. eToro will retrieve this information from a trusted database and align each dividend payment item with the appropriate tax withholding daily.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.

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