> ## Documentation Index
> Fetch the complete documentation index at: https://docs.itsgrand.app/llms.txt
> Use this file to discover all available pages before exploring further.

# How stock and ETF dividends work on Grand

> Grand uses a total-return model for stocks and ETFs — dividends are reinvested automatically, raising your token's value without changing the quantity held.

When a company you hold pays a dividend, Grand doesn't deliver cash to your balance. Instead, Grand uses a **total return model**: the dividend value is automatically reinvested into the underlying asset, and the price of your token rises to reflect that reinvestment. Your token quantity never changes — but each token becomes worth more over time.

<Note>
  Because dividends are reinvested rather than paid out, the price of a tokenized stock on Grand will gradually diverge from the raw market price of the underlying equity. The token price will be **higher**, reflecting all accumulated reinvested dividends.
</Note>

## How dividend reinvestment works

The following example walks through a full dividend scenario using a fictional stock, ACME, and its corresponding Ondo tokenized stock, ACMEon.

<Steps>
  <Step title="You buy one token at launch">
    Both ACME stock and ACMEon start at **\$100**. You buy 1 ACMEon token. At this point, 1 ACMEon represents exactly 1 share of ACME.
  </Step>

  <Step title="The stock price moves">
    ACME stock rises to **$105**. Your ACMEon token follows the same price movement and is now worth **$105**. The tracking is exact at this stage.
  </Step>

  <Step title="ACME declares a dividend">
    ACME announces a dividend of **$10 per share**. A withholding tax of 50% applies, so the net dividend is **$5** per share.

    <Info>
      Withholding tax rates vary by jurisdiction and asset. The actual rate applied to your holding will depend on the tax treatment of the underlying asset via Ondo Finance.
    </Info>
  </Step>

  <Step title="The dividend is reinvested automatically">
    Instead of depositing $5 in cash to your balance, the system reinvests that $5 into the underlying stock. At a share price of $100, $5 buys an additional **0.05 shares** of underlying value.
  </Step>

  <Step title="Your token now represents more underlying value">
    Your single ACMEon token now tracks the economics of **1.05 shares** of ACME stock.

    | Scenario            | Calculation  | Your token value |
    | ------------------- | ------------ | ---------------- |
    | ACME stays at \$100 | 1.05 × \$100 | **\$105**        |
    | ACME rises to \$110 | 1.05 × \$110 | **\$115.50**     |
    | ACME falls to \$90  | 1.05 × \$90  | **\$94.50**      |
  </Step>
</Steps>

<Note>
  Over time, as more dividends are declared and reinvested, the gap between the ACMEon token price and the raw ACME share price will widen further. This is expected behavior — the token price is **higher** because it embeds the compounded value of all reinvested dividends.
</Note>

## What is a total-return tracker?

Total-return trackers are financial instruments designed to mirror the **complete** performance of an asset — not just its price movements.

<AccordionGroup>
  <Accordion title="Price return vs. total return">
    A standard price-return tracker only reflects changes in the asset's market value. If a stock goes from $100 to $110, a price-return tracker goes up 10%.

    A total-return tracker captures everything: the same 10% price gain **plus** any dividends paid during that period, reinvested to compound over time.
  </Accordion>

  <Accordion title="What a total-return tracker includes">
    * **Price movements** — gains or losses in the asset's market value
    * **Income distributions** — dividends (for stocks) or interest payments (for bonds)
    * **Corporate actions** — mergers, stock splits, or other events that affect total value

    All income distributions are assumed to be reinvested, net of applicable withholding taxes.
  </Accordion>

  <Accordion title="Why Grand uses the total-return model">
    The total-return model gives you a more accurate picture of an asset's real-world performance. It also simplifies the experience: you don't need to receive, manage, or manually reinvest dividend cash payments. Compounding happens automatically inside the token.
  </Accordion>
</AccordionGroup>

<Tip>
  For deeper technical details on dividend handling and tokenization mechanics, refer to the [Ondo Finance documentation](https://docs.ondo.finance/ondo-global-markets/token-and-quote-pricing).
</Tip>