With DRP, what happens to 'funds carried forward' if you sell the shares?

Discussion in 'Shares & Funds' started by KayTea, 19th Jan, 2020.

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  1. KayTea

    KayTea Well-Known Member

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    Quite often, when using DRP, the entire amount available for spending isn't used in acquiring new shares, and there may be a few dollars carried forward and used in the balance to buy the next lot of shares at the next dividend payment time.

    Eg. If a dividend payment was due to be $500, and the DRP was paying $40 per share, that would mean that the DRP would allot 12 new shares (12 x $40 = $480), and then the remaining $20 would be carried forward and used at the next DRP.

    However, what happens to the $20 being carried forward if the shares are sold before the next ex-div date?
     
  2. SatayKing

    SatayKing Well-Known Member

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    You forego it. However, some companies sych as WES, WBC and MTL do pay the residue.

    Check the T&C's but that's tedious.
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The balance carries forward till the next time until you have enough for a whole share
     
  4. KayTea

    KayTea Well-Known Member

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    But if you have sold all the shares that you have (an allocation of 0), surely the company would no longer have you as a registered shareholder, and not assign any dividends to you the next time that they are paid...
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You will be registered on computershare or similar

    For some reason I have 1 share of a certain stock which is trading at about $56. Every quarter I get about 98c which is carried forward to have enough for another share allocation. I think I must have sold after the dividend date but before the payment of the dividend or something.

    Here is what the statement looks like:

    upload_2020-1-18_22-28-17.png
     
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  6. Islay

    Islay Well-Known Member

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    @KayTea my experience has been the money has been refunded at the next dividend date. The other times it has happened for me was when I cancelled DRP and moved to cash dividends something I did for all my holdings a few years ago.
     
  7. Trainee

    Trainee Well-Known Member

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    The answer is to get the money back by putting in a form to cancel the DRP.
     
  8. SatayKing

    SatayKing Well-Known Member

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    @KayTea as any good lawyer would say "What is in the contract?"

    Check the T&C's of the company's DRP. For AFI it is clause 9. Residue foregone. Others have different arrangements.

    And don't rely on the share registry to apply them properly in some circumstances. I had a battle Royal with one which said because one of my kids had changed from an SRN to a HIN they didn't have a carry over balance as it ws effectively a new share holding. Had to get the Company Secretary involved to give them a swift kick.
     
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  9. KayTea

    KayTea Well-Known Member

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    Thanks Terry - I'm thinking that cancelling the DRP could help avoid that. I'll investigate further.
     
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  10. Redwing

    Redwing Well-Known Member

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    Take the dividends (or partial divvies) as cash and allocate where needed in the portfolio :D
     
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  11. SatayKing

    SatayKing Well-Known Member

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    Aw @Redwing. Have ye not noticed some of the holdings of a few directors in some LICs and their attitude to DRPs? CB Goode to name but one. I wouldn't mind having about $46m of skin in the game.
     
  12. Redwing

    Redwing Well-Known Member

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    Be nice to have some of Charles Barrington's (and associated entities) dividend producing minion army

    upload_2020-1-20_8-18-34.png
     
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  13. SatayKing

    SatayKing Well-Known Member

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    Interesting to some but not others. When selecting partial DRPs for ALI and MLT you are given the option to select a percentage split rather than a specific number of shares.

    Probably means two statements for the dividend payment.
     

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