Where do dividends go to?

longwalks1

Random I know, I have a sharesaving scheme through my employer and every 3 months the dividends I earn from held shares are reinvested into my account, adding more shares.

If I hold dividend earning shares in a different company, and the shares are held in either a sharedealing account, or a S&S ISA, are the dividends automatically paid into that account on divi-pay day?

Cheers

k12479

In a S&S ISA the dividend payments will accumulate within the ISA adding to any cash already in there and maintaining there tax-free status.

On a sharedealing account it will depend on the provider, some will hold the cash, some will sweep the cash into a linked account (e.g. current acct.)

safestored4

At the online share dealing company I use dividends are paid into a cash account and I am free to either leave them there to be used towards my next share purchase or to transfer them to my nominated bank account. Where a company offers a dividend reinvestment scheme there is the facility to opt to participate in this and where this applies only the small balance of cash left over after the share purchase is paid into the cash account.

Any

Well that depends how shares are held.
Either you buy shares straight out (via broker or dealing site), or you buy funds which invest on your behalf and you opt for divident incom - then they will pay you divis in cash (to a bank or dealing account or cheque or whatever).
Usually company announces final accounts, profits and amound to pay out in dividends and then set a date for this payment.
OR
You buy funds that work just like your work shares - on divi day, they take the money and immediately re-invest them and get you more shares.

longwalks1

Thanks people
So if I were to buy and hold GSK shares in an X-O trading account, come dividend day they will automatically be paid into the account and re-invested as additional shares?

Any

Not sure about X-O exactly, but other platforms give you the choice!
Edit: It is all said here http://www.x-o.co.uk/how_to_use.htm#22

Biggles

britishboy wrote: »

So if I were to buy and hold GSK shares in an X-O trading account, come dividend day they will automatically be paid into the account and re-invested as additional shares?

With most brokers, the default is that dividends are paid into your account but you are able to choose to have them reinvested or paid to a bank account.

Personally, I let them accumulate until I have enough to make another share purchase.

sabretoothtigger

XO will not buy shares for you unless you order them to. They only handle dividends as cash and even then you must request payment to a bank if you arent going to manually buy more shares.

Many brokers will allow a choice to roll a div into shares when its paid, they charge a few percent to do that. Often makes sense unless the share is already expensive, but the tax is already paid on cash.
Only a proper Scrip share that never turns to cash avoids the tax I think thats correct, most companies require a direct holding with their broker for scrip.

Santander pay their dividends as scrip shares as they pay 10% yield its a fair amount and prefer people not to remove cash from the company balance sheet but build up shares.
Since its Spanish not quoted here directly they allow any broker to deal the scrip.
iii used to nick half my dividend when dealing this for me but halifax dont charge to do it, I dont think there is tax to pay this route as its a capital gain not income hence potentially very profitable.
XO refuse to allow scrip and pay cash instead, though they vary policy