Hi
I read a lot about benefits of dividend re-investing. However most brokers do not seem to offer this or may be I do not know how to do this. The cost of reinvesting cash dividend is quite high.
does anyone know any good brokers or strategies for this?
This topic may have been discussed in past threads but since I am new to this site, thought I will ask for advice and discuss.
Hargreaves Lansdown charge 1% (£1 minimum, £10 maximum).
Only problem is it is across the whole account, you can't pick and choose which shares it applies to, it's no point if the dividends are low, just eaten up by fees.
Probably works best with a good yield.
Aviva pays a hefty dividend (from 2017 it will be based on 50% of profit) and allow you to reinvest the dividend into more shares although there is a nominal cost associated with the transaction. The taxation situation is not better from this approach but the increased holding helps to generate progressively larger dividend yields as the total holding increases. I see it as a way of being paid out a second time.
Conversely, the flexibility of cash means you have a choice of simply reinvesting your dividend into the original firm or choosing somewhere else to invest.
I don't automatically reinvest in the company that has pad a dividend. I reinvest dividend receipts 3-4 times a year in the most appealing shares at that point in time while also considering overall weightings in the portfolio. I find it a more optimal approach.
Hi aranuba
I concur with crazycoops (post #4 above). Keep control of your dividends and invest when they build up sufficiently to warrant the entry costs of buying an investment. Also I concur with Herbie47 (post #2 above).
That said, if your investments are modest, and/or you are new to investing and/or have little time to focus on investing then you might be better to consider Unit Trusts and/or Trackers which accumulate automatically (i.e. effectively reinvest for you) and at low costs.
Regards
Howard
I re-invest dividends with Selftrade. A nominal charge of £1.50 per transaction. You can pick which share in your portfolio you wish to re-invest. Works very well although, for some 'foreign' companies like XLM it can take a while to purchase the shares after the div. payment date.
D.
Thanks guys. I have been following the strategy of just investing the accumulated cash into something else. That gets also added monies from next years ISA subscription or the sale of some stock. However wanted to see if this 're-investing' is actualy possible. Many thanks for all the helpful posts above.
