I,m a new investor, just got a letter saying I'm getting a dividend and do I want it in cash or shares.I'm thinking shares and assuming I'll have to pay the 1% stamp duty but no brokerage fee. Shares are held in NIB Custody A/c. Are there Pros/Cons to either choice ?
Share Dividend - cash or shares
- Thread starter twofor1
- Start date
Do you mean a DRIP? Note that even if the dividends are reinvested in shares through a DRIP then you are still liable for income tax (less any witholding taxes on dividends paid) on the divident income.
Check the terms & conditions of the DRIP in question.
If you had the money in your hand would you necessarily be rushing out to buy more shares in this company? If so then it's a good idea. If not then it's not. There are also issues with holding shares other than in certificate form. See the key posts on the pros and cons of the different ways of holding shares.
Never heard of a DRIP, have read the link, Thanks. Sounds similar to the first two paragraphs. The shares are in a major irish bank paying dividends twice yearly. The letter says; We have been informed that shareholders in the above company may choose to have the dividend paid either in cash or in new shares. Your net div. per share is €0.xx. You will receive only full shares, fractions , if any settled in cash. Tick appropiate box sign and return.
ndublinooc
Registered User
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"Sounds like a DRIP so. Make sure to read the detailed terms & conditions of the scheme before committing to it."
Does anyone know the difference between a DRIP as described above and a scrip dividend scheme?
Does anyone know the difference between a DRIP as described above and a scrip dividend scheme?
Never thought that it might be a script dividend issue rather than a DRIP! Wikipedia have a bit on scrip dividends in case that helps. I'm sure that Google might come up with more/better explanations/comparisons.
Presumably income tax is still due on the nominal dividend payment?
Letter is titled Notice of dividend payment. It tells me I have x no.shares,dividend is x per share, payment date is 15/01/08 and on that date I can have either shares or cash. No mention of DRIP or SCRIP or any terms/conditions. Does this not simply mean whatever number of shares my dividend will buy on payment day is what I will get if I choose this option, or all cash if I choose the second option.Should be no additional tax issues as all I'm doing is buying shares with my dividend. If this is the case are there pros/cons to either choice ? Thanks.
No additional tax issues. But bear in mind that if you are a 41% taxpayer and the dividends are paid net of dividend witholding tax (20%?) then you still owe the balance.
Did you read my first reply?!
20% is deducted at source. If you pay tax at the higher rate it is up to you to pay the extra amount.