Share Purchase - Company Going X DIV

ThankYouAndEnjoy!

Hello

Im looking to add/increase my share portfolio and have approx £5k available. Im interested in 1 particular company who are due to go X DIV beginning August

Are there any advantages/disadvantages to me purchasing the shares before/during they go X DIV?

debbie42

The only issue on top of the normal issues that I can think of would be tax related. For example, if you had significant tax liabilities for this year that you didn't want dividends to add to.

JDinho

... Also depending on the dividend level and the company there maybe a fall in the price once its XD as institutions sell out.

TTMCMschine

I don't think that either of those points are concerns you need to have in deciding whether to invest or not at x point in time. If you get the divi & have to pay tax on it, surely thats better than not paying the tax by not having the dividend - & on £5K it isn't going to be excessive.

As for the price, it probably will drop by an amount equal to the dividend, but if you're investing because you think the share price will grow over time (& I assume you're investing for a longer period of time than a few days), then that doesn't really matter either.

Can I ask which company you're looking at & why please?

Xbigman

When the share goes XD the price will drop by the amount of the dividend. Although you get the shares cheaper you don't get the dividend, so financially there is no difference.

If you are a higher rate taxpayer, or close enough that the dividend would put you over, then you are probably better off waiting and not recieving the dividend this time.

Some people buy the shares XD because they take the long term view that they recieved more shares for the same money so have more growth upside, plus they save the cost of re investing the dividends.

Horses for courses. There is no real wrong choice.
Regards


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