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As you say you are in for the long term then companies that offer drips etc should IMHO be at the core of your portfolio. Unless you need the cash from a div then by taking new shares instead your holding grows exponentially, albeit slowly at first. ATB.
To be fair, I hadn't really thought that deeply into all of this. My thinking was based simply on building a portfolio over the next 10 - 15 years into a number of different companies combined for both share value growth and divvi and see what I end up with. I have a stocks & shares ISA account and only buy shares that I can hold in this particular kind of account so hopefully I would be able to either dodge CGT or pay out the bear minimum I can get away with , but this is something I will have to address nearer the time I think.
Most of the big boys and a lot of others offer a SCRIP, where they issue new shares in lieu of divs, or a DRIP, where they buy more shares for you in the market place with your div. They are basically the same thing but have different advantages for the company depending on how much of their profit come from foreign earnings, i think. The big advantage to the likes of you and i is that it is a great way to build a large holding over time at no extra cost. If a share has a yield of 5-6% then your shareholding can double in around 15 years. Have been investing since the mid 70's and have always taken divs as shares with the result that some of my holdings are way in excess of what i originally bought, namely BP, BT NG and all of the utilities. All of my holdings are certificated and having always read all of the reports that have been sent out so it was easy for me find out if they had any sort of dividend alternative. If you hold through a broker or nominee service then this should be available to you with a bit of research. My shares were also my retirement pot - i was fortunate enough to retire in my mid 40's - and i have certainly done a lot better than the small amounts i invested into personal pensions before i completely lost faith in them. Plus you have the advantage that you can cash in what you want when you want - always keeping one eye on CGT - unlike a pension where your only option is to eventually buy an annuity. My portfolio is now heavily into major companies who have a healthy div yield so, as i am not currently selling to fund my retirement, it continues to grow without having to invest any more cash. My only tip would be to diversify as much as possible, i hold over 60 shares directly, along with over 30 Unit Trusts invested in just about every region in the world. Unfortunately i not yet managed to get them all going up at the same time, lol, but overall i should have a fairly healthy retirement. Unless Greece defaults and brings the rest of europe down with it!!! ATB.
Averaging down does have a high degree of risk, but it sounds like you know that already. but with pfd being a food producer this to my mind makes these risks slightly more acceptable as it is unlikely the supermarket chains will stop buying from them. I am a long term investor for growth (sp value and hopefully future divvi) with that particular share but I am not looking to have a large holding - was looking at between 40 - 50k shares but have decided to cut this figure to around 25k shares and then look into other things. I have never heard of scrip or DRIP, but my thinking is to build a portfolio of a few different companies over time for my retirement and then blow the lot on holidays etc. Thats the plan anyway.GL
Have never been a fan of averaging down as so often the sp goes down to never recover, and it just becomes a case of throwing good money after bad. But then i know nothing about PFD so am sure you have your reasons. These days i am strictly a 'Blue Chip FTSE100' type of guy, never going to make any spectacular gains but then not likely to lose my shirt either. Obviously not sure of your investment strategy, are you the quick in and out type, or the lay it down and watch it mature type? I'm definitely the latter so always take my divs as new shares if the company offers a SCRIP or DRIP alternative. SGC do offer such a scheme, so if you do not need the cash from a div then it is a great way of increasing your stake without dealing costs. ATB.
Yes it does, thank you. I am currently in PFD, which is taking a bit of a beasting to say the least at the moment, but I am averaging down a bit and will have the holding I want sooner than I thought, so Stagecoach has come up on my radar. I use East Midlands Trains to get to work and the annual ticket I buy costs a flaming mint so if I can get some of that back via a divvi it will take some of the sting out of it. Gl
Stagecoach made a payment of 47p per share on 21/10 as a way of returning £340 million to shareholders, with co-founders Sir Brian Souter and his sister Ann Gloag respectively pocketing £51m and £37m. We were given the choice of receiving the payment as either income or a dividend depending on our individual tax situation. As the £340 million roughly equated to about one-fifth of the stock market value they also underwent a 4-for-5 share consolidation in order that the sp was the same both before and after the payment - otherwise it would have fallen by roughly 47p as is normally the case when a div is paid. As you were not a holder you would not have seen any great change in the sp at the time of the payment, and indeed were probably not even aware of it. Had you been a holder you would have ended up with approx 80% of your original shareholding and 20% in cash, exactly the same situation as if you had decided to sell a 20% stake. IMHO both SGC and NEX are worth adding to any portfolio. Both benefitted from increased travellers due to the harsh winter and have continued to increase numbers as people have been forced to seek alternative transport solutions due to the high cost of petrol. Hope this answers yoyur question. ATB.
I just had a read through your last post, what is that all about? I am not in SGC as yet but it is something I am considering adding to my portfolio over the next couple of months. Any info I can get would be useful Thanks in advance
Stagecoach (SGC) retained its "buy" recommendation from Panmure Gordon, with an increased target price of 280p, from 260p. The broker is impressed with the transport group's ability to set up several Megabus hubs in North America and maintain a high operating margin. Panmure notes the company's strong track record and believes it is well placed to acquire a number of UK rail franchises which are coming up for offer. The shares grew 4.375p to 257.5p.
Liberum Capital downgrades Stagecoach from buy to hold, target price 262p
Three cheers for Stagecoach. Given the role of Scottish Old Labour in the affairs of the odious state-owned Scottish Bus Group, Labour should know all about bad businesses. Small shareholders who have stuck with Stagecoach for some years have been well rewarded.
Stagecoach has hit back at Labour after it was singled out as the sort of "predator" business that Ed Miliband attacked in his party conference speech on Tuesday. Maria Eagle, the Shadow Transport Secretary, is understood to have claimed the bus company was a "bad business", taking unjustified rewards of the kind Mr Miliband had criticised, according to the Times.
brilliant thanks alot for your time fella and be lucky..
If you hold 2500 shares now you will own 2000 after the return of capital, ie 80%. As the 47p cash return is also in the region of 80% of the current sp then the share price should stay the same after the return. There is effectively no difference in this exercise to you selling 20% of your holding and banking the cash. ATB.
thankyou so much for the info you have provided very very much appreciated..roughly how many shares will i be left with? If you dont mind,,thanks again
You can take the 47p dividend as either a capital return or as income. If you take the Capital Option (Alternative 1) then the total received - £1,175 in your case proppa - would form part of your 2011/2012 Gapital Gains allowance (CGT) and as long you do not exceed the £10,680 limit then no additional tax would be paid. If you take the Income Option (Alternative 2) then the total will be received as a normal dividend with an attached 10% tax credit, and you will not be liable to any additional tax unless the total of all of your income - salary, interest and dividends - pushes you into a higher tax bracket. Please note: The Default Option is Alternative 1. So you do NOT return the 'Form Of Election' if you want a return of capital. You only use the 'Form Of Election' to elect for the Income Option which is Alternative 2, or a mixture of the two. So the choice depends on your personal tax situation. If you will easily exceed your CGT allowance for the year then take it as income, but if the extra income will push you up into a higher tax bracket then take it as capital. If neither applies then it doesn't matter which you choose. If both apply then you have the choice of paying the extra 22.5% tax on dividend income (32.5% less the 10% tax credit) if you pay tax at 40%, or the extra 18% tax on exceeding your CGT allowance, so best to opt for the Capital Option. IMHO HMRC make the rules this complicated in the hope of confusing us into making the wrong choices and paying more tax!!! You will need to sit down with a pen a paper to work out how each option will affect you if you are close to either tax threshold. Personally, as i have already used up my CGT allowance for the year, i will be taking the Income Option as being retired my total income (interest and divs) will be nowhere near the £42,475 level at which i would be liable for 40% tax. Hope this helps you to make the right choice, if anyone disagrees with my assumptions or figures please feel free to contribute, i'm always happy to learn. ATB.
Further to last post, I think capital gains would not apply assuming you have other losses on shares you could write off gains against. Not sure that would apply to income?
Best option is whichever you will pay less tax on. If you work probably capital is the choice, additional income would incur more tax. Unless for some reason you are lucky enough to have a lot of capital gains! I am not a tax expert but thats how I see it!
i only have roughly 2500 of these what would be the best option for me..any help would be greatly appreciated thankyou
Yes, but the sp will fall by 47p to compensate - as it's a return of cash and not strictly a dividend - so not really a true yield!! And you will receive 4 New shares for every 5 you hold on 10/10, effectively reducing the total value of your holding by 20% - assuming a roughly equal sp both prior and post the consolidation. You would get the same sort of return by selling 20% of your shareholding!! Personally i'll be looking to reinvest the proceeds back into SGC, to retain my investment and give me a bigger share of the company. ATB.
by my maths that 19% at the moment
http://www.investegate.co.uk/Article.aspx?id=201108190700106473M
Proposed return of cash of approximately £340m 19 August 2011 1. Highlights Stagecoach Group plc ("the Company" or "Stagecoach") is today announcing proposals to return approximately £340m to its shareholders (the "Return of Cash"). The highlights of the proposals are: · Proposed one-off Return of Cash of approximately £340m to shareholders (equivalent to approximately 20% of current market capitalisation) · Return of 47 pence per Existing Ordinary Share · Return to be effected by D Share structure · Shareholders to have a choice between "income" or "capital" (subject to the restrictions explained herein) · Existing Ordinary Shares to be ultimately consolidated into New Ordinary Shares (the "Share Capital Consolidation") · Return of Cash is conditional upon shareholder approval · Return of Cash is intended to establish a more appropriate and efficient capital structure The group of companies of which the Company is the ultimate parent company is referred to in this announcement as "the Group".
http://www.investegate.co.uk/Article.aspx?id=201108190700166471M