iweb automatic dividend reinvestment or payout

sidneyyoungblood

Can anyone give me some advice  on the best option for dividends payouts on iweb - it is not a massive amount of around £600 a year but worried it is getting eaten in fees.

Not 100% sure of the costs ,  it says that I am charged 2% upto a maximum of £5 ... The payouts range from £1 to £100 amounting to around £600 over the year.

I know there is an option to have it paid out rather than the automatic dividend reinvestment but not too sure which is best.

any help would be appreciated.

wmb194

sidneyyoungblood said:

Can anyone give me some advice  on the best option for dividends payouts on iweb - it is not a massive amount of around £600 a year but worried it is getting eaten in fees.

Not 100% sure of the costs ,  it says that I am charged 2% upto a maximum of £5 ... The payouts range from £1 to £100 amounting to around £600 over the year.

I know there is an option to have it paid out rather than the automatic dividend reinvestment but not too sure which is best.

any help would be appreciated.

Yes, 2% (plus stamp duty if relevant). I always go for automatic payout and reinvest the dividends via cheaper brokers e.g., Trading212, CMC and IG but I suppose it depends on how much you care about a 2% fee and dealing with the withdrawals, reinvesting elsewhere etc.

https://www.iweb-sharedealing.co.uk/charges.html#:~:text=Dividend%2520reinvestment%2520purchases%2520are%2520charged,of%2520%C2%A35%2520per%2520stock.

InvesterJones

sidneyyoungblood said:

Not 100% sure of the costs ,  it says that I am charged 2% upto a maximum of £5 ... The payouts range from £1 to £100 amounting to around £600 over the year.

I know there is an option to have it paid out rather than the automatic dividend reinvestment but not too sure which is best.

any help would be appreciated.

Costs can be worked out as follows: Take the amount of the payout, then multiply it by 0.02. If the total is less than £5 then that's the cost. If the total is more than £5 then the cost is capped at £5. 

Best option is up to you - it's quite a fee for small reinvestments, so you could always pay out and accumulate them elsewhere and then pay a one-off £5 fee to reinvest the lump rather than each dividend - but you may lose out on time in the market.

jimjames

I always do reinvestment, cost is small compared to others and in the general scale of things.

Looking at my most recent dividend which was £87, the fee was £1.75 and stamp duty £0.44, total £2.19. The stamp duty will be the same anywhere so it's just the £1.75 you might be able to reduce. When iWeb costs me nothing per year for holding fees I still think it is excellent value for money - paying a small amount for reinvestment seems like a worthwhile thing if it keeps them in business.

dales1

I agree with Jim.

For 3 figure dividends, a 2% fee may sound harsh (but yet it is typical) whereas in cash terms it's only a few pounds - and capped at £5 ! It really is worth letting them do the work, rather than you dealing with reinvestment of small dividend amounts.

(For relatively larger dividends, I personally prefer to have them held in the account so that I can choose my own time (and destination) of reinvestment, and to avoid any price spikes in the market on that particular day).

sidneyyoungblood

Thanks for the advice , decided to leave it as is ..

kempiejon

sidneyyoungblood said:

Can anyone give me some advice  on the best option for dividends payouts on iweb - it is not a massive amount of around £600 a year but worried it is getting eaten in fees.

If I was adding extra money to the account I would hold the dividends and add them to new money when making a buy. If it's a lump sum, no new money added I think it's marginal. Saving it all up and adding £600 per year at £5 per deal is about ~1% so we're quibbling about a few quid a year. 

Thanks for the advice , decided to leave it as is ..

Won't be that wrong

marvin

Personally I keep the divi in the account and use it to buy shares as the share price at execution, if automatic, may not be at a price to my liking.

My recent Divi from Sainsburys has been used to buy TW at a price I am comfortable with so a form of divi reinvesting but not necessarily in the shares they came from. It could also be used to buy the same shares the divi came from if the price is right.

But everything is about how you want to manage your money no one can tell you what is best for you.

talexuser

It all depends on the dividend amounts. I usually reinvest straight away because £5 is small compared to the dividend. But the point above is true, 2% on small amounts is only a few pounds a year, and compared with the free platform where others may charge you 0.25% (or more!) on the whole portfolio value each year for free reinvesting, you are still saving a lot of money with iWeb.