I have noticed that a few companies offer dividends using a currency theyāre not traded with.
Example
Vodafone is traded in Ā£ but their dividends are ā¬.
Is there a beneficial reason for them to do this? Iām going to assume a currency conversion will be used before the dividend hits the wallet?
Yes, good observationāVodafone is a prime example of this. Although itās listed and traded in GBP, the company declares its dividends in euros.
The reason is that a large chunk of Vodafoneās revenue and free cash flow comes from eurozone operations. Declaring the dividend in euros helps align shareholder payouts with the currency in which the business actually earns and spends money.
In your case, since you have a UK-based account with Freetrade, youāll receive the dividend in GBP. Vodafoneās registrar will convert the euro-denominated dividend into pounds using the average market exchange rate over the five business days leading up to the payment date. Freetrade will then pass that GBP amount to youāno action needed on your end.
So yes, there is a currency conversion involved, but itās all handled behind the scenes.
Ahh that makes sense, I suspected that it may have been due to where the majority of their revenue comes from. Thanks for the informative reply!