Reinvesting my dividends

mr_fishbulb

Last month I made my first share purchase (had been only in funds before now).

I have £1000 worth of shares and the dividends are likely to total somewhere between £30 and £40.

If I reinvest this, I'm going to have to pay £10 for the broker fees. This doesn't seem very sensible, but then neither does leaving it there until I have enough dividends to make the broker fee an small percentage (which could take years).

What am I to do?

BLB53

Which broker are you with?

mr_fishbulb

BLB53 wrote: »

Which broker are you with?

Hargreaves Lansdown. It's in my ISA

Meeper

You should probably have stuck with unit trusts and OEICs instead of shares in that case. Share dealing costs money, and that's just the way it is. Trading in UT's and OEICs within an ISA is much more cost-effective as well as being a much more effective way to gain diversification from the risky approach of holding individual company shares.

mr_fishbulb

Meeper wrote: »

You should probably have stuck with unit trusts and OEICs instead of shares in that case. Share dealing costs money, and that's just the way it is. Trading in UT's and OEICs within an ISA is much more cost-effective as well as being a much more effective way to gain diversification from the risky approach of holding individual company shares.

I already have enough diversification built up through regular investing into the OEICs in there. The shares are on top of that.

Are you suggesting that someone doesn't buy shares unless they can afford enough that would generate £1000 worth of dividends (the minimum usually suggested when buying shares as to minimise the effect of the broker fees)?

I suppose I could use the dividend money to top-up one of my OEICs?

BLB53

I think HL are ok for unit trusts but for shares and Investment Trusts or ETFs you may be best with another online broker. I have been with Interactive Investor for over 10 years and have no complaints. Their standard charge is £10 but you can also use their 'portfolio builder' which is really economical for the dividend reinvesting and that is only £1.50 per deal.
Have a look at their website and see whether it might be an option?

BLB

IronWolf

most brokers have an automatic reinvestment function which has very small charges

gadgetmind

mr_fishbulb wrote: »

Are you suggesting that someone doesn't buy shares unless they can afford enough that would generate £1000 worth of dividends (the minimum usually suggested when buying shares as to minimise the effect of the broker fees)?

Our approach is to buy dividend income shares outside of an ISA/pension wrapper as my wife doesn't pay higher rate tax, so no more tax. Additionally, we always have a cash reserve in our share account, which dividends add to, so the divis get re-invested as part of ongoing share purchases.

For divis in an ISA, you can either way for the next subscription (annual? monthly?) or just let them accumulate.

barak

mr_fishbulb wrote: »

.....I have £1000 worth of shares and the dividends are likely to total somewhere between £30 and £40.
If I reinvest this, I'm going to have to pay £10 for the broker fees.....
What am I to do?

Not necessarily! This was discussed at some length recently -

https://forums.moneysavingexpert.com/discussion/3424505

moneylover

BLB53 wrote: »

I think HL are ok for unit trusts but for shares and Investment Trusts or ETFs you may be best with another online broker. I have been with Interactive Investor for over 10 years and have no complaints. Their standard charge is £10 but you can also use their 'portfolio builder' which is really economical for the dividend reinvesting and that is only £1.50 per deal.
Have a look at their website and see whether it might be an option?

BLB

Does this portfolio builder automatically re-invest your dividend the day it drops in? Or is it something that just happens, say, once a month?

I started the other thread and havent yet found a way around the problem - I have got X-O which is cheap but doesnt re-invest dividends. I think that I might just wait for my dividends on each of my four shares and then sell each one at a suitable point when high and re-invest with another broker on next dip.
I wish that I had seen the comparison of brokers before I went with X-O
It is correct, is it , that you cannot do cheap re-investment with HL?

cashbackproblems

IronWolf wrote: »

most brokers have an automatic reinvestment function which has very small charges

yep iii hardly charge anything