Is Standard Life DRIP worth it?

jabbahut40

I am a shareholder in Standard Life and have been offered to join their DRIP scheme:

Dividend reinvestment plan (DRIP)
The dividend reinvestment plan (DRIP) uses your cash dividend payment to buy more shares in Standard Life plc through a special dealing arrangement. You will be charged a dealing commission of 0.5% of the purchase value (with a minimum of £1.25). You will also pay UK stamp duty reserve tax (currently 0.5% of the purchase value). The DRIP is provided by Capita IRG Trustees Limited (CIRGT).

Any thoughts on whether this is worth joining based on a small holding (900 shares) or better to take the dividend as cash?

Jabba

alanwjones

I'd also be interested in the answer to the above.

financial_illiterate

I'm not pretending to be an expert, but isn't the questions the same as:

Do I want to gradually accrue more shares in Standard Life or do I want to take out a cash amount whenever a dividend is paid?

jabbahut40

financial_illiterate wrote: »

I'm not pretending to be an expert, but isn't the questions the same as:

Do I want to gradually accrue more shares in Standard Life or do I want to take out a cash amount whenever a dividend is paid?

Thanks. I am aware of the above options. My question was more around whether reinvesting is worth it given the charges applied for my size of holding. Any comments would be appreciated.

Jabba

sabretoothtigger

The charges arent too bad. Its more a case of do you want to buy SL at any price and if then at what price will the DRIP dates be. I believe you could decide each time whether to let it go ahead, 170p is good value and then 230p is less value, SL is not set to grow especially.
I'd just alter it based on which its closer to

Coveredinbees!!!!

I got a similar amount of share as you I think I'm going to sign up for it as the return is good and if they give me the money out in to my bank account it's just going to disappear.

artha

sabretoothtigger wrote: »

The charges arent too bad. Its more a case of do you want to buy SL at any price and if then at what price will the DRIP dates be. I believe you could decide each time whether to let it go ahead, 170p is good value and then 230p is less value, SL is not set to grow especially.
I'd just alter it based on which its closer to

I posted the same question as op some time ago and after the comments on here was not sure either way but in the end opted to sign up (approx 800 shares).

The above advice seems sensible provided you can opt in and out as you choose. Anyone know offhand whether opting in and out is possible?

bencat

I am not certain but looking at the scheme details which I signed up to I think that you will not be given the option to buy or not buy each time the dividend is declared.

If you sign in to the Drip Scheme then at each payment in November and May they will convert that at the price date indicated in to shares with the above charges applied. As with the SCRIP agreement this will continue and you will accrue shares until you decide to with draw from the scheme and then your buying will cease.

Once you have left the scheme it is not possible for you to join again and all your future dividends will then be paid directly to your account.

As I say this is just what I have summised from reading the published details of the plan. If there is someone who has more experience in this area who knows differently then I would be be glad to hear from them .

If there was a simple option to buy or pass at each divident it would be useful as you could view the price offered each time to decide if it was low enough or not but I think this would resut in a huge administration headache for the company dealing with these shares and this is the reason you have to decide to be in it or not no half way house.

Given the current gearing of the company and their strong place in the SIPPS market which is likely to become much large in the near furture and given the very healthy yield of the shares I still feel the DRIP scheme is the better option for small share holders rather than the small return you would get twice yearly which you would probably never notice. It is also relevant that all the shares I currently own with SL are free given to me when they demutualised so whatever happens when I do decide to cash them in it is a nice free bonus. Yes I would love to get the best possible price for them but whatever I get is still much better than nothing.