Lloyds divi options

Mr_Prudent

Just had news through regarding Lloyds Banking Group dividend options. Take the cash or reinvest via Dividend ReInvestment Plan (DRIP). Personally as it’s such a small amount (in my case at least) think I’ll DRIP it and forget about it for now. What do others think?

bowlhead99

If it's a small amount that you don't need/want to spend on anything (like costs of living or cash savings accounts or other more appropriate investments), no real reason to take it in cash. You might as well have a few more shares.

Whether they give you a few pounds in cash, or a few shares and a few pence, you still stick it on your tax return at the end of the year as if you got the cash (if you're a higher rate taxpayer). So there's no real 'advantage' to either route but obviously if you are happy to reinvest, a DRIP gives you the chance to roll your divs into more shares without paying broker fees for the privilege of actually buying some on the open market.

Some people end up with shares in companies that they don't really want or need, because (e.g.) they used to work there or they inherited them or they like them for sentimental reasons and can't be bothered to sell and buy something more appropriate. If that describes you, and you don't think you want to reinvest because you don't think much of their prospects compared to every other company or fund on the planet that you could be investing in, consider whether you even what to keep your main holding.

Mr_Prudent

Think I’ll hang on to mine (a couple of thousand) as bank shares will only go up in the long term. The extra shares will be of more value than the 0.75p per share cash.

bowlhead99

Well, each extra share that you pay for, out of your divs, has a value in the market today of whatever you're being asked to pay for it. You *hope* it will only go up in the long term. There were plenty of people thinking or hoping that when they paid £4 or £5 or £6 for Lloyds shares in years gone past. Similarly people thought that about Northern Rock, Bradford & Bingley, Lehmans etc.

Mr_Prudent

Well as I’ve said it is only a small holding so I’m not going to lose any sleep if bank shares did bomb again, but on the other hand if they go up substantially over the next five years it could be a nice little “bonus” for me in my old age!

badger09

bowlhead99 wrote: »

Well, each extra share that you pay for, out of your divs, has a value in the market today of whatever you're being asked to pay for it. You *hope* it will only go up in the long term. There were plenty of people thinking or hoping that when they paid £4 or £5 or £6 for Lloyds shares in years gone past. Similarly people thought that about Northern Rock, Bradford & Bingley, Lehmans etc.

That would be me

Still hoping

PeacefulWaters

badger09 wrote: »

That would be me

Still hoping

There are several times as many shares in circulation now.

I think you need to lower your hopes!

melbury

I'm going to take mine in cash as I need the income and that £29 will certainly help;)