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message-exclamationAbout Stocks & ETFs Dividends

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Stock & ETF Dividends (Total Return)

When you hold tokenized stocks (e.g., TSLA, NVDA) or ETFs on Grand, dividends are handled via a Total Return model.

Important: When a dividend occurs, the price of your asset will increase. The amount (quantity) of tokens you hold remains the same.

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How It Works (Example)

Let’s take a sample stock, ACME, and its corresponding Ondo tokenized stock, ACMEon.

  1. At Launch: Both start at $100. You buy 1 ACMEon token.

  2. Price Movement: If ACME stock goes up to $105, your ACMEon token follows exactly.

The Dividend Scenario: Now, assume ACME stock declares a dividend of $10 per share.

  • Withholding Tax: Let's assume a withholding tax of 50%. The net dividend received is $5 ($10 * 50%).

  • Reinvestment: Instead of paying you $5 cash, the system automatically reinvests this amount into the stock.

  • Result: At a share price of $100, that $5 buys an additional 0.05 shares of underlying value.

Your New Token Value: Your single ACMEon token now represents the economics of 1.05 shares of ACME stock.

  • If the ACME stock price is $100, your token is worth $105.

  • If the ACME stock price rises to $110, your token is worth $115.50 (1.05 * $110).

Summary: Over time, the price of the tokenized stock will not perfectly match the spot price of the underlying asset. Instead, the token price will be higher, reflecting the accumulated value of all reinvested dividends.

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What is a total-return tracker?

Total-return trackers are financial assets that are designed to mirror the complete performance of an index or asset. Unlike price return trackers, which only capture an asset’s market value changes, total return trackers account for all cash flows—dividends, interest, or capital gains distributions—assuming these are reinvested to compound returns (net of applicable withholding taxes).

A total-return tracker includes:

  • Price movements – gains or losses in the asset’s market value

  • Income distributions – such as dividends (for stocks) or interest (for bonds)

  • Corporate actions – like mergers that may affect total value (learn morearrow-up-right)

By capturing both capital gains and income, total-return trackers offer a more comprehensive reflection of an asset’s performance than price-only trackers.

Reference: For deeper technical details on dividend handling and tokenization mechanics, please refer to the official Ondo Finance Documentationarrow-up-right.

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