xStocks dividends: what the multiplier is and how your dividend is reinvested

Key takeaways

• xStocks do not pay cash dividends: the dividend is automatically reinvested into more exposure to the same stock.
• That reinvestment is reflected in the multiplier, a factor that starts at 1.0 and goes up every time the company pays a dividend.
• With Skipo you can buy dividend-paying tokenized stocks in Chile, in pesos, commission-free and with 24/7 or 24/5 access depending on the xStock.

If you bought tokenized stocks on Skipo of a company that pays dividends, such as Coca-Cola, McDonald's or Salesforce, you will not see a deposit in dollars in your account. The dividend is reinvested automatically and your xStock holding increases. The mechanism that makes this possible is called the multiplier, and in this guide we explain how it works.

What is a dividend?

A dividend is the portion of its profits that a company distributes to its shareholders. In the United States it is usually paid every quarter, as a fixed amount per share (for example, US$0.50 for each share you own).

To receive it, you have to hold the stock before the ex-dividend date (ex-date), which is the cutoff: anyone who buys from that day onward no longer receives the dividend for that period. On that same day, the stock price usually drops by roughly the amount of the dividend, because that cash leaves the company.

A dividend is cash the company hands to its shareholders, and the date that matters for receiving it is the ex-dividend date.

What is the xStocks multiplier?

The multiplier is a number that indicates how many shares of the company each xStock token represents. According to the official xStocks documentation, every xStock starts with a multiplier of 1.0: one token equals one share.

Every time a corporate action occurs, such as a dividend or a split (stock split), the issuer adjusts the multiplier so that your balance keeps representing the correct number of shares. That is why, over time, the multiplier of a dividend-paying stock ends up slightly above 1.0.

The multiplier is the bridge between the token you hold and the real shares that token represents.

How are xStocks dividends paid?

xStocks dividends are reinvested automatically, after deducting the applicable withholding taxes. The process works like this:

1. The company pays the dividend to the xStocks issuer, which holds the real backing shares.
2. US withholding tax is deducted. According to Kraken's xStocks FAQ, the calculation uses the net dividend after a 30% withholding.
3. The net dividend is reinvested in more shares of the same company.
4. The multiplier goes up in proportion to the net dividend divided by the stock's closing price on the previous day.
5. Your holding increases. You do not have to do anything: the adjustment happens around the ex-dividend date.

As Kraken explains: you do not receive a cash deposit, but you do get more exposure to the stock, as if you had reinvested the dividend yourself.

With xStocks, the dividend does not arrive as money in your account, but as more stock.

What does it look like in numbers? An example

Let's take a hypothetical case to understand the mechanics (the figures are for illustration only):

• You hold 10 tokens of an xStock with a multiplier of 1.0, that is, 10 equivalent shares.
• The stock closed the previous day at US$100 and the company pays a dividend of US$1 per share.
• After the 30% withholding, the net dividend is US$0.70 per share.
• US$0.70 divided by US$100 is 0.007. The multiplier goes from 1.0 to 1.007.
• Your 10 tokens now represent 10.07 equivalent shares.

In practice, on the ex-dividend date the stock price usually falls by about the amount of the dividend, and your larger holding offsets a good part of that drop (not all of it, because part goes to the tax withholding). The important thing is that you now have more shares working for you.

The multiplier turns each dividend into a small extra amount of shares, which builds up dividend after dividend.

What happens to the multiplier when there is a split?

The multiplier also absorbs splits and reverse splits (when the company divides its shares into more units or consolidates them into fewer). In a split, the multiplier goes up in the same proportion; in a reverse split, it goes down.

The xStocks documentation gives this example: in a 4-for-1 split, a multiplier of 1.008 becomes 4.032. That way, your balance automatically reflects the new shares, without you having to do anything.

Dividends, splits and reverse splits all go through the same mechanism: the multiplier adjustment.

How do I see my dividends on Skipo?

On Skipo, your holding of each xStock is shown in equivalent shares, already adjusted for the multiplier. When a company pays a dividend, what you will notice is that the quantity of your xStock goes up slightly, without a credit in pesos or dollars appearing.

So if you compare your position before and after an ex-dividend date, the difference in quantity is exactly your reinvested dividend. If you are still not clear on what an xStock is, our guide to tokenized stocks and how to invest from Chile starts from scratch.

On Skipo, your dividend shows up as a larger quantity of your xStock, not as a deposit.

How to invest in dividend-paying stocks with Skipo

On Skipo you can buy xStocks of dividend-paying companies in pesos, commission-free and with settlement in minutes. Here is how it compares with other platforms available in Chile:

With Skipo, dividends are reinvested automatically and you also pay no commission to buy or sell.

How to buy dividend-paying tokenized stocks on Skipo: step by step

1. Download the Skipo app. It is available on the App Store and Google Play.
2. Create your account. Sign up with your email and verify your identity.
3. Transfer funds. Send pesos from your bank account or crypto from another wallet.
4. Find the stock. In the stocks section, type the company's name or its ticker (for example, KOx or MCDx).
5. Buy. Choose the amount in pesos, from CLP 1,000. Confirm and you are done.

Frequently asked questions

Do xStocks pay dividends?

Yes. When the company behind an xStock pays dividends, the dividend, net of withholding taxes, is automatically reinvested into more exposure to the same stock through a multiplier adjustment. It is not paid in cash.

What is an xStock's multiplier?

It is the factor that indicates how many shares each xStock token represents. It starts at 1.0 and is adjusted with each dividend, split or reverse split, so that your balance always reflects the correct number of shares.

Do I receive the dividend in pesos or dollars on Skipo?

No. With xStocks the dividend does not arrive as cash: it is reinvested and your xStock holding increases slightly.

How much tax is deducted from an xStock dividend?

The dividend is reinvested net of US withholding tax. According to Kraken's xStocks FAQ, the calculation uses a 30% withholding on the gross dividend.

When is the dividend reinvested?

The multiplier adjustment is published before the corporate action takes effect and is applied around the ex-dividend date. To be entitled to the dividend, you must hold the xStock before that date.

Do I have to do anything to receive the dividend?

No. Reinvestment is automatic: you do not have to claim or accept anything. You just need to hold the xStock in your account before the ex-dividend date.

Why does the xStock price drop on the dividend date?

Because the underlying stock usually drops by about the amount of the dividend on the ex-dividend date, since that cash leaves the company. With xStocks, that drop is largely offset by the increase in your holding through the multiplier.

Do all tokenized stocks pay dividends?

No. Only those of companies that pay dividends, such as Coca-Cola or McDonald's. Companies like Adobe or Palo Alto Networks do not pay dividends, so the return on their xStocks comes only from changes in their price.

The multiplier is how xStocks deliver your dividend without you lifting a finger: it reinvests it in the same stock and adds it to your holding. Understanding it helps you read your position correctly, especially if you invest in companies that distribute profits every quarter.

With Skipo you can buy dividend-paying tokenized stocks in Chile, in pesos, commission-free and 24/7 or 24/5 depending on the xStock, with the money back in your account in minutes when you sell.

Download the Skipo app and start investing in dividend-paying stocks today.

This article is for informational purposes only and does not constitute financial advice. Asset prices can go up or down, and all investments carry risk. Before investing, assess your personal financial situation.