What is a dividend adjustment?

A dividend adjustment is a technical process that keeps your position profit-neutral when a dividend is paid.

It is also applied to a share or index CFDs position when a dividend is paid on the underlying share or a constituent share of an index.

When a company or index pays a dividend, its price typically drops by the dividend amount. Without an adjustment, this price movement would unfairly affect your profit or loss.

The ex-dividend date is the day a stock begins trading without its dividend. For an index, an adjustment is made equal to the number of points by which the index must be reduced to account for those constituent shares going ex-dividend at the close of the cash market. The ex-dividend amount is estimated by Bloomberg and rounded to the tick size used for that index to determine the adjustment.

For long positions, the dividend adjustment is credited to the trading account. For short positions, the adjustment is debited from the trading account.
 

How it works:

SELL positions: The price drop creates a profit, so the dividend amount is debited from your balance.
BUY positions: The price drop creates a loss, so the dividend amount is credited to your balance.

For example: 
DJ30 dividend = USD 1.50
Contract size = 1
Total Position size = 2 lots

Adjustment:
1.50 × 1 × 2 = USD 3.00
BUY: +USD 3.00 (displayed as Div&DJ30&2 in MT4/MT5)
SELL: –USD 3.00 (displayed as Div&DJ30&2 in MT4/MT5)

Display Format: Div&<Product Name>&<Net Volume>

MT4/MT5 display example is shown below:

Any chart profit or loss caused by the dividend is fully offset by the adjustment, so your total equity remains unchanged.

You can find the specific calendar for upcoming dividend adjustments for indices on the PU Prime website: https://www.puprime.com/client-notices