Dividend Re-investment Plan: To Join or not to Join?
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Bill M
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Re: Dividend Re-investment Plan. To Join or not to Join?
I don't do it ENP. What I hate most is that the new shares they issue you with is quite often priced higher than the current on market buy price.
I pool all my dividends then buy what I want at the price I want and when I want and usually it's better than the dividend re-investment plan price.
There is also the individual capital gains tax calculations that need to be done when sold at tax time. Each parcel has to have it's own CGT calculated. (not really a problem if you have a program to do it for you)
The only 2 positives I can see (if you can call it that) is dollar cost averaging back into the stock and not paying brokerage.
It just isn't worth the trouble for me, cheers.
I don't do it ENP. What I hate most is that the new shares they issue you with is quite often priced higher than the current on market buy price.
I pool all my dividends then buy what I want at the price I want and when I want and usually it's better than the dividend re-investment plan price.
There is also the individual capital gains tax calculations that need to be done when sold at tax time. Each parcel has to have it's own CGT calculated. (not really a problem if you have a program to do it for you)
The only 2 positives I can see (if you can call it that) is dollar cost averaging back into the stock and not paying brokerage.
It just isn't worth the trouble for me, cheers.
pixel
DIY Trader
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Which company?
I did it with RIO during the GFC as l was doing lots of travel in remote areas in WA and didn't have access to internet to buy/sell, different circumstances l guess. Anyways, it turned out well while l did the trade, l got a 100% return on RIO (with dividends included) in a 12 month period.
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Re: Dividend Re-investment Plan. To Join or not to Join?
This is true for TAH at least in my experience. Everytime they send me a letter telling me at what price the DRP works at, they claim it is a discounted figure from that taken over a period of time, but by the time it's actually paid, the SP has always been lower than that discounted figure.
FML.
This is true for TAH at least in my experience. Everytime they send me a letter telling me at what price the DRP works at, they claim it is a discounted figure from that taken over a period of time, but by the time it's actually paid, the SP has always been lower than that discounted figure.
FML.
So_Cynical
The Contrarian Averager
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I do it when the shares will be issued at under my original buy price or say perhaps 20% above but no more than that...i like averaging down but not up, so recently im in all the div reinvestment plans my shares are running...planning on exiting most in May now that the market has had a run up.
The pros and cons are
Pros = No brokerage, often issued at a decent discount, handy if your compounding.
Cons = Often issued at little or no discount and at the worst SP time, can be a CGT pain in the neck if you don't have portfolio software.
The pros and cons are
Pros = No brokerage, often issued at a decent discount, handy if your compounding.
Cons = Often issued at little or no discount and at the worst SP time, can be a CGT pain in the neck if you don't have portfolio software.
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Probably a newer thread on this, but would be interested to hear how many people elect for a DRP given it's that time of the year. I leave my non-ASX holdings assets set to DRP as it's just too time consuming to manage various shares in various currencies. But I do not enrole in DRPs in Australia as it would seem to me that most times the DRP is not cost effective. For example TGR has a 2% discount on the 5 day average. That will probably end up being about 3.49-3.51 cents per share. Currently the SP is at 3.52. Hardly a discount. Most seem to sit on a 5% discount, which is ok but not great. Usually given a little patience you can buy shares for lower than the DRP price anyways. The one that is interesting is RXP which is subject to a maximum price of 33.5 cents (currently trading at 41 cents). I'll take that one up.
So_Cynical
The Contrarian Averager
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I'm in everything again, signed up to everything back in April when it looked like COVID would keep prices low, issue price wise it's been a 50/50 result, some good pricing some bad.
Craton
Mostly passive, contrarian.
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As am still building for retirement, was fully in with held stocks that have DRP but I've opted out of one because I don't want any more shares in this ASX top 50 so and so.
One thing of note it that DRP is not always in play as the board may decide to only pay out in cash. Couple of examples and from memory, BHP and WPL.
One thing of note it that DRP is not always in play as the board may decide to only pay out in cash. Couple of examples and from memory, BHP and WPL.
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Always a problem if you sell your main holding (or want to) before receiving the small parcel.
That and treating each parcel as a separate capital gain / loss event when you do sell. I'm happy to collect the dividend and move forward.
Yeah, when you sell,it's a nightmare working out the capital gain for each little parcel of DRP shares.For a huge shareholding,it could be worthwhile,but as has been said here previously,the discount is hardly worth all the bother. Take the cash dividend and buy on market, at later date,for a better price.
