re-investing dividends in an ISA

moneylover

During the current market mayhem I have bought shares in some of the currently high dividend payers in the FTSE 100

I have a cash ISA each year but never a stocks and shares ISA
as its extremely unlikely at the grand old age of 65 that I will ever become a higher rate taxpayer. However you never know.

My question is what do I do about the dividends that come from the shares? How could I keep them invested in an ISA? The total for one years stocks and shares ISA is not going to be very great and I cannot see that it will be worth buying shares with the money given dealing costs and stamp duty. Presumably no way round this problem and its really only worth while holding growth shares and growth/accumulation funds in an ISA at least till you have built up a good few years in the ISA?

I have a H-L account and a X-O account and both have shares in them although I normally now use X-O as deals so much cheaper. X-O doesnt charge a management fee for an ISA but H-L does. Do I get anything extra for paying H-L to manage an ISA for me?

Many thanks

Lokolo

HL don't give you anything extra apart from the fact you have buy shares from foreign markets - whereas X-O only allows UK trades.

Dividends can be paid inside the ISA which you can then withdraw or use to buy more shares.

barak

moneylover wrote: »

...My question is what do I do about the dividends that come from the shares? How could I keep them invested in an ISA? The total for one years stocks and shares ISA is not going to be very great and I cannot see that it will be worth buying shares with the money given dealing costs and stamp duty. Presumably no way round this problem....

It doesn't have to cost much to reinvest your dividends. Check the Terms of any S&S ISA manager you are considering. Mine has an option to reinvest dividends automatically at low cost. To reinvest my largest dividend in June/July of £257.38 cost £1.50 commission plus £1.29 stamp duty; the smallest of £31.23 cost £0.31 commission plus £0.16 stamp duty.

moneylover

barak wrote: »

It doesn't have to cost much to reinvest your dividends. Check the Terms of any S&S ISA manager you are considering. Mine has an option to reinvest dividends automatically at low cost. To reinvest my largest dividend in June/July of £257.38 cost £1.50 commission plus £1.29 stamp duty; the smallest of £31.23 cost £0.31 commission plus £0.16 stamp duty.

thats really good and the most convincing reason yet I have heard for a lower rate taxpayer to use an ISA for shares becuase otherwise the divi would just be paid out and you would need to accumulate a lot of dividends before worth the cost of buying more shares. Fine if you want to use the dividend for income but not otherwise.

Does the same low re-investment rate apply to Investment Trusts held within an ISA? Presume it likewise depends on the ISA manager?

Ark_Welder

moneylover wrote: »

thats really good and the most convincing reason yet I have heard for a lower rate taxpayer to use an ISA for shares becuase otherwise the divi would just be paid out and you would need to accumulate a lot of dividends before worth the cost of buying more shares. Fine if you want to use the dividend for income but not otherwise.

Does the same low re-investment rate apply to Investment Trusts held within an ISA? Presume it likewise depends on the ISA manager?

The same can be done outside an ISA too. HSDL have a dividend reinvestment scheme at low cost.

moneylover

Ark_Welder wrote: »

The same can be done outside an ISA too. HSDL have a dividend reinvestment scheme at low cost.

thats useful to know about Halifax share dealing. I am with X-O and H-L so will have to find out if they do. Is it common with the online brokers to do this? Makes sense as such a useful service.

Ark_Welder

moneylover wrote: »

thats useful to know about Halifax share dealing. I am with X-O and H-L so will have to find out if they do. Is it common with the online brokers to do this? Makes sense as such a useful service.

Can't say with any certainty about which others might do the same - a case of reading the various T&C's. I'm more of a 'take the dosh and buy something when I've built up a worthwhile amount' type.

Theyarv1

As previously mentioned, most online trading firms have special prices for reinvesting dividends, they will be the same inside and outside of an ISA.

In your account there will be an option for what to do with your dividends. Unfortunately you can't specify this share by share but has to be blanket. I think the 3 options usually are
1. reinvest
2. keep in account
3. keep in account and send to bank every 6 months

if it helps, BP paid out a divi in June and these were my reinvestment costs


Stock Name: BP ORD USD0.25 Quantity: 7 Unit Price (GBP): 4.462 Consideration(GBP): 31.23 Commission Charged(GBP): 0.31 Stamp Duty(GBP): 0.16 PTM Levy(GBP): 0.00 Net Total Due(GBP): 31.70
so from here you can see that they only charged me 31p commission instead of £10 :T

TDM850

moneylover wrote: »

During the current market mayhem I have bought shares in some of the currently high dividend payers in the FTSE 100

I have a cash ISA each year but never a stocks and shares ISA
as its extremely unlikely at the grand old age of 65 that I will ever become a higher rate taxpayer. However you never know.

My question is what do I do about the dividends that come from the shares? How could I keep them invested in an ISA? The total for one years stocks and shares ISA is not going to be very great and I cannot see that it will be worth buying shares with the money given dealing costs and stamp duty. Presumably no way round this problem and its really only worth while holding growth shares and growth/accumulation funds in an ISA at least till you have built up a good few years in the ISA?

I have a H-L account and a X-O account and both have shares in them although I normally now use X-O as deals so much cheaper. X-O doesnt charge a management fee for an ISA but H-L does. Do I get anything extra for paying H-L to manage an ISA for me?

Many thanks

If you want a managed ISA moneylover you are probably better off going to a broker such as Redmayne Bentley on an advisory or discretionary basis. Alternatively, you could try Traders Own - their stocks and shares isa charges no management fees and the dealing is at £9 per trade via the telephone or online. If you want to reinvest your dividends you will pay the normal dealing fee again though

moneylover

Theyarv1 wrote: »

As previously mentioned, most online trading firms have special prices for reinvesting dividends, they will be the same inside and outside of an ISA.

In your account there will be an option for what to do with your dividends. Unfortunately you can't specify this share by share but has to be blanket. I think the 3 options usually are
1. reinvest
2. keep in account
3. keep in account and send to bank every 6 months

if it helps, BP paid out a divi in June and these were my reinvestment costs

Stock Name: BP ORD USD0.25 Quantity: 7 Unit Price (GBP): 4.462 Consideration(GBP): 31.23 Commission Charged(GBP): 0.31 Stamp Duty(GBP): 0.16 PTM Levy(GBP): 0.00 Net Total Due(GBP): 31.70
so from here you can see that they only charged me 31p commission instead of £10 :T

Well, I seem to have struck unlucky and should have done more investigation. Am with X-O for cheapness as previously mentioned for shares. Also registered with H-L as I have an index tracker with them

Via X-O have now invested in 4 ftse 100 shares that I hope will pay out good dividends and that I plan to keep long term. A total of £12000 . However have now discovered that the quote above does not apply to X-O. Any re-investment of dividends inside or outside of an ISA will cost me £5.95 each time plus the stamp duty.
For further investment when I plan to re-invest dividends I will have to go elsewhere -am not sure what happens with H-L- how do other people get on - which is the online broker in the quote? I don't want to end up with too many online brokers obviously.

In my opinion this is definately one reason for not using X-O !

Just_landed

Well, I seem to have struck unlucky and should have done more investigation. Am with X-O for cheapness as previously mentioned for shares. Also registered with H-L as I have an index tracker with them.

iii have low charges also.