Reinvesting Dividends using company DRIPs

AlphaCentauri42

Hi all

Quick question about DRIPs. I hold shares in an ISA with a broker (HL). They re-invest the dividends for me, but treat it like a normal share purchase, so I pay £10 dealing charge each time.

It's clearly cheaper to actually be in the company's DRIP scheme itself. If I register in a company's DRIP scheme, what happens? Do the shares get bought directly, with the cash never actually reaching my ISA account (which is fine)? And where will they be held - with my broker, or the company's broker?

All thoughts welcome. Cheers!

barak

This isn't an answer to your question but it's no secret that HL are not the best place to hold shares. I don't use HL and my ISA shares [as opposed to Unit Trusts/OEICS] are on a platform [no longer available] run by Halifax.

Reinvesting dividends is about as cheap as it could be. A dividend I received of £477.40 was reinvested for Commission of £1.50 + [unavoidable 0.5%] Stamp Duty of £2.37. The smallest dividend reinvestment I can find was £14.07 including commission of 14p and Stamp Duty of 7p.

Perhaps somebody using Halifax 'directly' can confirm that their charges are as low.

I don't know whether or how you would be charged for a DRIP within HL's nominee account but I'm sure somebody else does.

yee_har

FWIW https://www.iii.co.uk has a Dividend Reinvestment Charge of 1% (max £10) + Stamp Duty.

I mention it as I heard they "used Halifax's platform" - again FWIW.

cashbackproblems

https://www.iii.co.uk as mentioned is by far the cheapest! HL for funds iii for everything else!

AlphaCentauri42

Thanks for your replies. I contacted one of the companies (Vodafone) whose DRIP I planned to join, who told me that the DRIP scheme is for people who hold shares directly, eg. with paper certificates. If you have broker held shares, you have to use your broker's plan. The only advantage I can see of company's own plans is the low re-invest fees, usually .5%.

So, HL charge £10 per re-investment, which is not great value. As one of the earlier posters rightly said, III are good value, charging 1% with a maximum of £10. But the best deal I could find was from iWeb. They charge 1%, with a maxim of £1.50.