Dividend Options - iWeb Platform

mazibee

I have recently opened an S&S ISA account with iWeb

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Please select how you would like dividends to be handled on each of your accounts.

'Automatic Dividend Reinvestment' will enable dividends from UK and Irish CREST eligible stocks to be automatically reinvested into the source stock. Any remaining cash will be paid into your share dealing account. Please note a 2% commission (maximum £5) is payable on all dividend reinvestment.
'Hold In Account' will retain the dividend in your share dealing account until you take further action.
'Pay Away Immediately' will send collected dividend totals to your nominated bank account shortly after the dividend pay date.
'Pay Away 6-Monthly' will send collected dividend totals to your nominated bank account every 6 months, usually at the end of April and October of each year.
Dividends will usually be paid to accounts within ten working days of us receiving the money. Please note: we will receive the money on, or after, the dividend payment date.

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I have copied this from the iWeb website.

At the moment I have checked 'Automatic Dividend Reinvestment' option

Please can someone suggestion as which option is the best and cost effective as iWeb will charge 2% commission (maximum £5) on all dividend reinvestment.

I have the following shares SMT, HSBA, STAN, BP, CINE, IAG.

I plan to add INRG worth £5K also.

Also the dividend reinvested will count towards the S&S ISA Limit?

Thanks in advance.

Thrugelmir

Reinvested income does not count towards the annual allowance.

The options available are down to personal choice. There's no best option.  Though at the moment you're not going to receive a huge amount of income on those holdings. 

NottinghamKnight

Anything within the isa is protected, no tax due which is the same for selling and rebuying stocks as it is for dividends. I'd say auto reinvest is a bad idea, potentially expensive on small holdings, probably best to allow to hold in the account and then look to purchased every few months when the sums get worthwhile. You will then make an active decision what to purchase so can be used as a form of rebalancing. In terms of charges are you sure that there isn't a minimum charge of £5 for purchasing from dividends?

easterbunni

I have Halifax Sharedealing (pretty much the same as iWeb) and I have it as Hold in Account, then I can pick and choose when and where I want that cash to go, and let it build up to a decent amount

george4064

NottinghamKnight said:

Anything within the isa is protected, no tax due which is the same for selling and rebuying stocks as it is for dividends. I'd say auto reinvest is a bad idea, potentially expensive on small holdings, probably best to allow to hold in the account and then look to purchased every few months when the sums get worthwhile. You will then make an active decision what to purchase so can be used as a form of rebalancing. In terms of charges are you sure that there isn't a minimum charge of £5 for purchasing from dividends?

Don’t think there is a minimum charge, see the full costs here; https://www.iweb-sharedealing.co.uk/assets/costsandcharges.pdf

talexuser

NottinghamKnight said:

In terms of charges are you sure that there isn't a minimum charge of £5 for purchasing from dividends?

Obviously not since it clearly says maximum charge in the terms quoted above. I agree auto reinvestment is not the cheapest with iweb, better to build up  reasonable amount and rebalance.

mazibee

Thanks everyone.

@thrugelmir , @NottinghamKnight , @easterbunni , @george4064 , @talexuser

So I will switch from 'Automatic Dividend Reinvestment' to 'Hold In Account'

But I have question as they have mentioned
'Hold In Account' will retain the dividend in your share dealing account until you take further action.

So dividend will be retained in the S&S ISA account or in the Share Dealing account,i  have all my amount in S&S ISA

easterbunni

mazibee said:

Thanks everyone.

@thrugelmir , @NottinghamKnight , @easterbunni , @george4064 , @talexuser

So I will switch from 'Automatic Dividend Reinvestment' to 'Hold In Account'

But I have question as they have mentioned
'Hold In Account' will retain the dividend in your share dealing account until you take further action.

So dividend will be retained in the S&S ISA account or in the Share Dealing account,i  have all my amount in S&S ISA

It will remain in the account it came from

MonroeM

Depends on the amounts you have invested in each of your shares. My S&S ISA is also with iWeb but I have some fairly large amounts in some shares so I go for automatic dividend reinvestment. 

Sally57

MonroeM said:

Depends on the amounts you have invested in each of your shares. My S&S ISA is also with iWeb but I have some fairly large amounts in some shares so I go for automatic dividend reinvestment. 

To make it financially viable how much would you need to have invested in a particular share for it to make sense to decide on the automatic dividend reinvestment route?

MonroeM

Sally57 said:

MonroeM said:

Depends on the amounts you have invested in each of your shares. My S&S ISA is also with iWeb but I have some fairly large amounts in some shares so I go for automatic dividend reinvestment. 

To make it financially viable how much would you need to have invested in a particular share for it to make sense to decide on the automatic dividend reinvestment route?

Well to a certain extent that’d would depend on the dividend yield/share price. As an example, if I held £10K in GSK shares with a dividend payment of 5.6% then to reinvest the £560 would only cost me the maximum fee of £5 which in my opinion is very reasonable. However, if the GSK share price is very high at the time I would also consider the ‘Hold in Account’ option and rebalance some other part of my portfolio that would benefit more.