Standard Life - 73p Cash Payment But .......

gt94sss2

AMG_Merc wrote: »

Spidernick, where do you get the chance to opt for the cash as a capital gain? I seem to have missed this.

Its too late to do so know but the broker with whom you hold the shares with should have given you the option. If you hold the shares via the standard life portal that their Register has then I think you could login and choose.

If you hold a paper certificate, I guess you would get a letter asking you.

The default for most people, was to receive it as a normal dividend.

Regards
Sunil

AMG_Merc

This is a great thread and is the only forum I could find anywhere able to educate me in detail on this subject on my level - unlike SL who spout “financial-ese” in their documentation. Yes, their wording is no doubt legal and correct but that doesn’t mean Joe Public (i.e.: me) understands such phraseology…

I’m not a total financial idiot but I thought that by voting for the Canadian sale I would be getting 73p per share in addition to my holding and not after reducing its value – so yes, a “windfall”.

Instead, it seems to me that if I add the value of my cheque (sans tax) to the value of the (now reduced) shares I have less than before. So, I am no better off and it has cost me time taken in research, a cheque to deal with, and reduced future dividends – or am I missing something here?

AMG_Merc

gt94sss2 wrote: »

Its too late to do so know but the broker with whom you hold the shares with should have given you the option. If you hold the shares via the standard life portal that their Register has then I think you could login and choose.

If you hold a paper certificate, I guess you would get a letter asking you.

The default for most people, was to receive it as a normal dividend.

Regards
Sunil

Thanks Sunil, I am direct into the SL share site. I was expecting reinvestment via DRIP and only found our that this wasn't possible when the cheque dropped on my mat. I didn't want a cheque.

gt94sss2

AMG_Merc wrote: »

Thanks Sunil, I am direct into the SL share site. I was expecting reinvestment via DRIP and only found our that this wasn't possible when the cheque dropped on my mat. I didn't want a cheque.

Any DRIP scheme is only offered at the discretion of the company involved. Because of the size of the special dividend, SL decided they wouldn't offer it this time (it was mentioned in the paperwork).

When SL pay their next 'normal' dividend I guess the DRIP scheme will be back in force.

Regards
Sunil

gt94sss2

AMG_Merc wrote: »

I’m not a total financial idiot but I thought that by voting for the Canadian sale I would be getting 73p per share in addition to my holding and not after reducing its value – so yes, a “windfall”.

They asked you to vote on two things:

1. A 73p special dividend;
2. A share consolidation done at a ratio of 9/11

Instead, it seems to me that if I add the value of my cheque (sans tax) to the value of the (now reduced) shares I have less than before. So, I am no better off and it has cost me time taken in research, a cheque to deal with, and reduced future dividends – or am I missing something here?

You are - the share consolidation didn't affect the value of your shareholding but the number of shares held by everyone (and the total in issue).

If they hadn't done so, their would have been a sharp fall in the share price.

I suggest you read the rest of this thread and the one here - especially bowlhead99's posts which tend to be extremely helpful.

Regards
Sunil

Spidernick

My cheque arrived yesterday.

I note that the proposed May 2015 dividend will be a lower total amount than the equivalent amount last year, whereas the trend had previously been good increases year on year.

Could someone knowledgeable like bowlhead99 explain how this is not another perceived negative around the change (if the dividend may well increase in relative terms, but the overall dividend amount will decrease in actual terms because of the lower number of shares). Thanks.

AMG_Merc

gt94sss2 wrote: »

- the share consolidation didn't affect the value of your shareholding but the number of shares held by everyone (and the total in issue).

Sunil

Thanks Sunil, now bear with me as I'm clearly being dense but...


I now have over 600 less shares - assuming the share price is roughly the same as before - how can the value of my shareholding not be reduced?

bowlhead99

Spidernick wrote: »

My cheque arrived yesterday.

I note that the proposed May 2015 dividend will be a lower total amount than the equivalent amount last year, whereas the trend had previously been good increases year on year.

Could someone knowledgeable like bowlhead99 explain how this is not another perceived negative around the change (if the dividend may well increase in relative terms, but the overall dividend amount will decrease in actual terms because of the lower number of shares). Thanks.

The company used to be larger and more valuable ; it used to own a large Canadian business employing thousands of people and making millions of pounds profit a year. Now the company is smaller because it has sold Canada and will not necessarily make so many million pounds profit per year. It received $3 billion for selling Canada and gave most of that right back to its shareholders so that the resulting cash wouldn't be languising in its bank account doing nothing.

As a consequence, what you as an investor now hold is a bunch of cash in your hand, and a smaller investment, in a smaller and more efficient company (your ownership percentage of the company is unchanged).

But the company is now smaller, so the overall dividend annual dividend it plans to pay out in actual pounds is lower than what it would have paid out in actual pounds when it was bigger. You are right it will be the same or an increase in relative terms which is what important.

For you as an investor, you are getting the same or better in relative terms as a dividend but you are getting fewer actual pounds than you would have if you had held a larger investment. But you don't hold a larger investment you hold a smaller investment and 73p per old share in your hand. If you want to receive more money, you can do something with the 73p. You could put it in a bank account earning 5% a year risk free. You could invest it in the Canadian company that bought SL's Canadian division. You could invest it in any one of 5000+ shares on the UK or North american stockmarkets or into over 3000 options from a UK investment fund supermarket. Or you could invest it into SL, a smaller and leaner and more efficient company which is paying out more dividends in relative terms than it used to. There are plenty of choices. It was entirely right that SL distribute their spare cash from the Canadian sale to you, so that you can make those choices, rather than hoard it in their company bank account with no use for it.

If you choose not to do any of these things, you can't be surprised that you receive fewer absolute pounds of income every year. You are getting the same or greater relative returns from SL as you were before.

gt94sss2

Spidernick wrote: »

I note that the proposed May 2015 dividend will be a lower total amount than the equivalent amount last year, whereas the trend had previously been good increases year on year.

Could someone knowledgeable like bowlhead99 explain how this is not another perceived negative around the change (if the dividend may well increase in relative terms, but the overall dividend amount will decrease in actual terms because of the lower number of shares). Thanks.

The final dividend last year was 10.58p- this May it will be 11.43p - which I make an increase of 8%

Your individual dividend payment may will be smaller and SL will issue less in dividends (in total) as a result of the consolidation because it is now a much smaller company.

If they hadn't changed the number of shares, then they would have rebased (i.e. 'cut') the dividend/share instead.

If you are investing for income, you have the option of buying more shares which will mean the % of SL you own will be larger than before or investing elsewhere..

Regards
Sunil

gt94sss2

AMG_Merc wrote: »

I now have over 600 less shares - assuming the share price is roughly the same as before - how can the value of my shareholding not be reduced?

Because if they had not reduced the number of shares, the share price of each would have fallen to reflect the fact that 73p had been paid out. the only reason its around the same price is as there are now less shares.

Think of this formula:

share price x number of shares = value of shareholding (+ cash/divdends)

If the share price was £1 and you had a 1000 shares - its the same as the share price is £2 but you only have 500 shares. If the total number of shares in the company also reduced by 50%, you would still own the same %.

Regards
Sunil