Getting dividends as stocks

[Tramadoon]

Hi guys,

So, let's say you have £100 worth of stock. Dividend is 4% payable quarterly. Stock price is 40p per share. Zero taxes, cos it's my example...

You're supposed to get £1 worth of shares. Two shares cost 80p, three costs £1.20. How many shares do you get?

Any input into how this works would be most welcome, because I can't make heads or tales of the divi stocks I was just given...

Thank you!

 

[BigDeal]

In you example you will get 2 shares as you can't get part of a share with this arrangement. Depending upon the arrangement you have, you will either get the balance in cash or it will be held over until the next dividend payment and put towards shares the next time.

 

[Tramadoon]

Thanks BD. So the dividend stock company will hold on to my 20p and, next time, all things being equal, I'll get three shares?

I'm surprised that they would be so organised.

I got some dividends recently. I did a calculation, and I'm a few quid short (less than a share's worth). So you think they'll give it to me next time? (Seeing as I didn't get any cash top up).

 

[BigDeal]

If you've received the shares under a scrip dividend arrangement, then yes, the left over funds will be carried forward and added to the next dividend amount. If however the dividend was paid out as cash and then the shares were bought, the residual amount should be paid to you.

 

[Tramadoon]

I'll go an look up "scrip dividends". Thanks again BD!

 

[teddyfelder]

Hi guys,

So, let's say you have £100 worth of stock. Dividend is 4% payable quarterly. Stock price is 40p per share. Zero taxes, cos it's my example...

You're supposed to get £1 worth of shares. Two shares cost 80p, three costs £1.20. How many shares do you get?

Any input into how this works would be most welcome, because I can't make heads or tales of the divi stocks I was just given...

Thank you!

Scrip dividend arrangement will work well, the funds are added to the next dividend amount. In case there is any pending amount it shall be paid to you later.