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02-17-2017, 09:14 PM
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#21
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Recycles dryer sheets
Join Date: Jan 2011
Posts: 127
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Ok. So i would not technically be selling low taking it in cash. Since the # of shares remain preserved. I would lose the ability to invest in more shares at a lower price. Do I have it right?
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02-17-2017, 09:41 PM
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#22
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2013
Posts: 11,078
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Quote:
Originally Posted by Quantum Sufficit
Ok. So i would not technically be selling low taking it in cash. Since the # of shares remain preserved. I would lose the ability to invest in more shares at a lower price. Do I have it right?
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+1
That is the answer I think is generally true. I think you have to be careful not to buy dividend producers that can't sustain their dividends. As long as you are in equities that have historically paid and increased dividends over the long haul with free cash, I believe it makes sense.
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02-18-2017, 05:45 AM
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#23
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,687
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Quote:
Originally Posted by Quantum Sufficit
Ok. So i would not technically be selling low taking it in cash. Since the # of shares remain preserved. I would lose the ability to invest in more shares at a lower price. Do I have it right?
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Yes, that is right. Receiving a dividend is not selling or buying. You receive the dividend, and choose to keep it, or reinvest by buying more shares automatically.
You could accumulate cash from these Dividends for a time, and buy some other investment, too.
Last night I was explaining these concepts to one child who holds stock, paying some dividend. She was disappointed that taxes were due on this. Now on her own, she did not follow advice to increase contributions to 403b and look at possible tax advantages in her IRA.
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02-18-2017, 06:26 AM
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#24
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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Quote:
Originally Posted by MRG
IIRC the current price was the close minus the distribution amount. This might explain why you perceive an additional amount is given for a reinvested distribution.
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Fiddling with this is the trick I've seen. Latest cycle said company took the average stock price of the 14 (roughly) trading days, because it resulted in a small premium vs. the closing stock price of the dividend award date (which is what your code did). The year before that they chose another window.
Doing that is not my perception so much as a stated policy and communication to shareholders to do this consistently, to encourage opting for stock dividends. For this company at least, have seen it elsewhere as well since.
It surprised me the first time I read it, didn't think it would be legal. Apparently, it is. Likely within boundaries which is why the difference is so small.
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02-18-2017, 06:32 AM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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Quote:
Originally Posted by Quantum Sufficit
Ok. So i would not technically be selling low taking it in cash. Since the # of shares remain preserved. I would lose the ability to invest in more shares at a lower price. Do I have it right?
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You have the ability to invest in more shares at the market price any day you chose and any dividends reinvested are reinvested at the market price.
IOW, even if you set things up to take the $1 dividend in cash, you can always make a choice to take that $1 and then invest it at the $1 market price.
If you reinvest the dividend you end the day with 1.1 shares. If you take the dividend in cash and make a decision to use that cash to by shares you end the day with 1.1 shares. A distinction without a difference.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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02-18-2017, 07:17 AM
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#26
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Dryer sheet aficionado
Join Date: Feb 2017
Posts: 27
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I take my dividends in cash even though I reinvest them, that way I get to target them to specific stocks that look like better investments than others. Just allowing your dividends to automatically reinvest in the original stock is not the best use of your new money. If no stocks look particularly worthy, take the cash.
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02-18-2017, 12:17 PM
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#27
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Recycles dryer sheets
Join Date: Jan 2011
Posts: 127
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Wow. I love this board. Such help from everyone! Thanks all
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02-18-2017, 04:29 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2013
Posts: 11,078
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Quote:
Originally Posted by Totoro
Fiddling with this is the trick I've seen. Latest cycle said company took the average stock price of the 14 (roughly) trading days, because it resulted in a small premium vs. the closing stock price of the dividend award date (which is what your code did). The year before that they chose another window.
Doing that is not my perception so much as a stated policy and communication to shareholders to do this consistently, to encourage opting for stock dividends. For this company at least, have seen it elsewhere as well since.
It surprised me the first time I read it, didn't think it would be legal. Apparently, it is. Likely within boundaries which is why the difference is so small.
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Thank you, it makes sense. I'd never heard of the practice but it's interesting to me. Yes that does make sense as an issue many times will trade at a premium prior to the record date.
Can you share an companies name that does this, or search criteria? Thanks again.
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02-19-2017, 03:47 AM
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#29
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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This is the company I'm most familiar with: Accell Group. They make bicycles, based in the Netherlands (of course ..).
http://www.accell-group.com/files/3/...on%20ratio.pdf
Is where they describe the conversion rate in detail for 2015. I read their releases in Dutch, but it should be exactly the same in English.
Note that they announced the conversion rate on May 18th while the ex-dividend date was April 28.
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