How do you manage your dividends?

[psailagroup]

Hi all,
My next lesson in trading shares is dividends, I currently own some stock, these stock pay out dividends "etc"
I need some advice on the following
1) how do you set up your dividends to be paid into your trading account?
2) can you reinvest that money in the same company that gave you dividends, I'f so is there any benefits?

Cheers

 

[Bill M]

Hi all,
My next lesson in trading shares is dividends, I currently own some stock, these stock pay out dividends "etc"
I need some advice on the following
1) how do you set up your dividends to be paid into your trading account?

Find out which share registry your company is with. Usually it is either Computershare or linkmarket services. Then setup an account with that service and fill in the bank crediting details of your trading account.

2) can you reinvest that money in the same company that gave you dividends, I'f so is there any benefits?

Cheers

Yes you can, it called the Dividend Reinvestment Plan. Most companies have them but occasionally they don't. The benefit is that you don't have to pay brokerage fees for those dividends and usually it is at a slight discount to market. I don't do it myself as I like to buy when I want and at what price I want. It has it's positives and negatives, cheers.

 

[bellenuit]

Hi all,
My next lesson in trading shares is dividends, I currently own some stock, these stock pay out dividends "etc"
I need some advice on the following
1) how do you set up your dividends to be paid into your trading account?
2) can you reinvest that money in the same company that gave you dividends, I'f so is there any benefits?

Cheers

1) how do you set up your dividends to be paid into your trading account?

This is usually done through the share register that handles the company shares. Computershare and Link Marketing Services handle most Australian companies. Both companies allow you to register a userid and password with them, through which you can log on to their respective sites and make changes to where dividends are to be paid.

When you buy a company share for the first time, you will usually be sent some documentation that includes a form to specify where dividends are to be paid.

2) can you reinvest that money in the same company that gave you dividends, I'f so is there any benefits?

If you take the dividend in cash, you can do what you like with that cash. However, many companies offer a dividend reinvestment plan (DRP). This means that instead of receiving the dividend in cash, you can have the company instead issue the equivalent amount in shares of the company (this is usually based on a weighted average value of the shares in the weeks leading up to the dividend). Sometimes they even offer the shares at a discount to this weighted value. This is also done without brokerage being charged, which is an advantage to you compared to taking the dividend in cash and then using it to buy the shares yourself through your broker. If the dividend results in an uneven amount of shares (30.25 say) being bought under the DRP, usually you will be allocated the even amount (30 in this case) and the left over unused dividend payment will carry forward and be used in the purchase of shares when the next dividend comes around.

However, even if you enrol in a company's DRP, you still treat the dividend as a dividend for tax purposes, even though you have not taken it in cash. You also declare the full dividend, even if a part is carried forward because an uneven amount of shares were purchased.

 

[psailagroup]

Hi Every one,

This is what I thought, Just needed to ensure I was not missing out on anything.

Cheers