Share dividends - cash? Or more shares?

Turtle

Dear all


I currently have just over 6100 HSBC shares. The dividend is returning around 6% at the moment and I can't decide whether it's better to take the dividends as shares, or cash.


We've got good amounts saved/invested aside from these shares, but I appreciate it's quite a lot to hold in 1 share. If I change back to cash dividend then it will either go into S&S ISA or it will go towards cash savings (which are currently saving 1.75% in mortgage interest, as they will be offset).


Interested in thoughts as to what you'd do, and why. If more info is needed, please ask. Thanks in advance

bowlhead99

Turtle wrote: »

Dear all


I currently have just over 6100 HSBC shares. The dividend is returning around 6% at the moment and I can't decide whether it's better to take the dividends as shares, or cash.


We've got good amounts saved/invested aside from these shares, but I appreciate it's quite a lot to hold in 1 share. If I change back to cash dividend then it will either go into S&S ISA or it will go towards cash savings (which are currently saving 1.75% in mortgage interest, as they will be offset).

There are thousands of companies in the world. If you already have £35k of HSBC shares, and you receive £2k of cash, then in terms of holding a diversified portfolio of investments, do you really think the best use of that £2k is likely to be to spend the £2k on yet more HSBC shares??

Seems to me you would be better to add it to your diversified portfolio of investments within your S&S ISA. Is there a reason why you are holding the HSBC shares outside the ISA when you have spare ISA capacity, given that dividends in excess of £2k per year are taxable at 7.5, 32.5 or 38% depending on your tax band, while dividends and capital gains inside an ISA are tax free?

Turtle

bowlhead99 wrote: »

There are thousands of companies in the world. If you already have £35k of HSBC shares, and you receive £2k of cash, then in terms of holding a diversified portfolio of investments, do you really think the best use of that £2k is likely to be to spend the £2k on yet more HSBC shares??

Seems to me you would be better to add it to your diversified portfolio of investments within your S&S ISA. Is there a reason why you are holding the HSBC shares outside the ISA when you have spare ISA capacity, given that dividends in excess of £2k per year are taxable at 7.5, 32.5 or 38% depending on your tax band, while dividends and capital gains inside an ISA are tax free?

Thanks for your response. The shares are from an employee sharesave scheme and whilst they are all in my name, some were bought with joint savings, some with mine and some with my husbands. As we're married I know in reality they're all ours, but I wanted to keep them separate for a few reasons. You're right though, I will switch back to cash dividends, then when they are paid I'll boost the ISAs. I do want to sell some, but I'm not happy with the price at the moment and we don't need the money, so I can afford to wait.