Fidelity Special Values Investment Trust - Dividends

melbury

I received a copy of the company report today and it says that they are proposing a final dividend of 16.25p per share payable in December.

Probably a stupid question, but I can't recall ever having received a dividend payment from them before. Do they actually send the money, or do you think they just buy you extra shares with it?

Many thanks:o

jimjames

Fidelity Special Values has been paying dividends for many years. You've not said how you are holding your shares but if it is in the Fidelity Share plan I believe the default is reinvestment.

Have you had a look at your previous annual statements to see what they show? There should be a transaction for dividend and another for purchase of new shares for that value.

I got the report today too. Always good to get such cheerful reading like that. 63% increase in share price! 25% increase in dividend.

Quite a good year I think! Just disappointed I sold out part of my holding into Special Situations and China SS a couple of years ago.

melbury

Thanks for your reply.

I know it sounds totally dim not knowing whether or not I have received dividends previously.

I have been paying into this fund at the meagre rate of £50 per month for some 11 years, within an ISA.

Presumably they just reinvest any dividends, as I can't recall ever having been sent cash.

The fund has done very well over the past couple of years, but must say I am getting to the stage where I would prefer income paying funds over purely capital growth.

westy22

The fund has done very well over the past couple of years, but must say I am getting to the stage where I would prefer income paying funds over purely capital growth.

If you receive income or dividends then you may be taxed if you are a higher rate taxpayer. Why not just sell a few units of FSV each year and make a capital gain instead?

bowlhead99

westy22 wrote: »

If you receive income or dividends then you may be taxed if you are a higher rate taxpayer. Why not just sell a few units of FSV each year and make a capital gain instead?

Good general advice, although the OP did say it was in an ISA.

melbury wrote: »

I have been paying into this fund at the meagre rate of £50 per month for some 11 years, within an ISA.

must say I am getting to the stage where I would prefer income paying funds over purely capital growth.

If you're thinking of a preference for income funds due to the fact you perceive the economy is looking a bit shaky and you think dividend-paying funds might be better in a downturn, then fair enough. Everyone has their investing style and views for the short and long term, and a balance of funds with different characteristics is eminently sensible.

However, you might just be meaning that as you're getting a bit older and maybe retiring/retired or whatever, you'd like to supplement your income by drawing something out of this investment pot.

If so, one thing to bear in mind is that unless you have loads of unused ISA allowance each year, a stash of tax-protected assets is very useful - should be almost considered sacred - and your overall wealth might be greatly improved by not drawing anything out of that pot.

For example if you don't spend ISA income, instead leaving it to grow as reinvested units in the ISA (or by using a growth fund that doesn't even have the option of taking cash out without actively selling part of it), your tax-free stash will hopefully be larger next year. If you instead spend the ISA income and don't spend the interest income from your unwrapped savings, or your high-interest current accounts or from your salary or inheritance or whatever, then next year you will have a relatively lower ISA balance and a higher bank account, which is far from ideal.

Example, say you have £10-12k in a S&S ISA wrapper delivering returns growing at 5 or 6%. It seems foolish to deliberately allocate this to income funds, just so that over the course of the year they send you £600 spending money which you take out of the ISA, and then one of the things you do with your spending money is invest £50 a month into the same ISA.

Your result is that you have recycled the £50pm / £600pa out of the ISA and back in again, potentially missing out on growth during your time out of the market, and at the end of it your ISA balance is still where it would have been if you hadn't taken dividends in the first place, and you've used up £600 of your £6-12k new S&S subscription allowance kindly granted to you by the government for that new tax year.

If you're not troubled by subscription limits because you can't afford to hit them anyway, this is perhaps not something to worry about. And of course as I mentioned in my first paragaph, it doesn't matter if you get your total return from income stocks or growth stocks and most people do a bit of both.. But as a general rule it can make a lot of sense to let the ISAs keep going and growing and live off your spare 'unwrapped' cash, rather than live off your ISA income and let the spare cash keep growing.

jimjames

westy22 wrote: »

If you receive income or dividends then you may be taxed if you are a higher rate taxpayer. Why not just sell a few units of FSV each year and make a capital gain instead?

Unfortunately you can't offset CGT against income tax. So if you are higher rate taxpayer, hold FSV and get a dividend you will be liable to pay tax on that dividend. Selling some shares to realise a capital gain will not affect your income tax situation.

melbury wrote: »

I have been paying into this fund at the meagre rate of £50 per month for some 11 years, within an ISA.

That makes sense. It is very hard when you have 24 transactions showing (12 DD in, 12 purchases) per year to spot another payment in for the dividend and the subsequent purchases. I was also previously investing £50 per month but stopped a couple of years ago so it is now very obvious as the dividends are the only transactions each year.

Within an ISA I'd expect the default option would be reinvestment to ensure that you make best use of that tax wrapper.

melbury

westy22 wrote: »

If you receive income or dividends then you may be taxed if you are a higher rate taxpayer. Why not just sell a few units of FSV each year and make a capital gain instead?

No, I have never been and never will be a higher rate taxpayer.:(

melbury

bowlhead99 wrote: »

Good general advice, although the OP did say it was in an ISA.

However, you might just be meaning that as you're getting a bit older and maybe retiring/retired or whatever, you'd like to supplement your income by drawing something out of this investment pot.



The paragraph above exactly sums up my thinking. With interest on savings being so pathetic and retirement only a few years off, I just thought that perhaps it would be beneficial to have some income from dividend paying shares.

Thank you so much for such an informative reply.