How are US share prices listed?

Strummer22

grey_gym_sock wrote: »

so far as companies are concerned, they won't care about ppl who aren't reinvesting because they only have less than the price of 1 share in cash. tens or hundreds of pounds times thousands of small shareholders won't amount to a significant sum from the point of view of the companies.

I'll admit to not knowing enough about this to really comment confidently, but I think this may be an outdated view that smart companies might do well to let go of. The recent proliferation of DIY trading platforms that allow you and I full control of what we invest in (with limited success so far for me, I'm afraid, but I'm learning!) means that small private investors will own more and more of a company's stock. 100,000 small investors could hold as much as one large fund. Obviously this tends to be more the case with small caps which institutional investors don't touch - but the trend towards small investors will continue for both small and large cap companies.

grey_gym_sock

look at the "analysis of shareholdings" in any company's annual report, and you'll see that, even if they have a large number of shareholders, the small shareholders only own a tiny % of the shares between them.

e.g. BT (which i picked because i'm guessing that it has 1 of the largest numbers of shareholders of any company) has 892,238 shareholders. but the biggest 533 shareholders (that's shareholdings of 1million+ shares, worth c.£5m+) own 87% of the shares.

if you define small shareholdings in BT as under 800 shares (under £3,800-worth), then small shareholders own about 2.4% of the company. the price per share is under £5, but suppose it were higher, and those shareholders couldn't reinvest their dividends immediately. BT is about to pay an interim dividend of 4.4p. that comes to about £9m paid to small shareholders. last friday, 7m BT shares were traded, i.e. £34m-worth. it will hardly make a difference if that £9m can't be reinvested immediately, given that only a minority of shareholders will want to reinvest anyway. and that this only happens on 2 days a year, when dividends are paid.

anyway, if ppl want to buy more shares in a company, they will, when they have enough cash to do so. there's nothing magic about reinvesting each dividend in the shares of the same company who paid it, immediately.

what are you paying your broker for dividend reinvestment? because if there's a fixed or minimum charge, it won't be very efficient for small dividends, anyway.

indeed, investing in individual companies can be prohibitively expensive unless you have a relatively large amount to invest - perhaps £50,000, or more.

re smaller companies: i doubt that small shareholders own a higher % of most of them. the big shareholders may be different from what you'd expect in a big company - e.g. they may the ppl who started the company, instead of institutional shareholders.