Gudgeon10 Nov 2010 10:17
I'm assuming that your question refers to BNC and not divs/scrips/drips in general, and that you didn't hold BNC last year, or only took cash. If you hold your shares through a broker then I'm assuming they collect the divs and pass them on to you in the form of cash credited to your account, you would need to check with them to see if they are able to take the Nov div as new shares on your behalf. The details below refer to holding your shares through the 'Grupo Santander Nominee Scheme' or an approved Nominee scheme.
For three of their annual divs, Feb May and Aug, they do things normally. They announce Xp per share which you take as cash, or if you hold your shares in a 'Santander Shareholder Account' - SSA - you can use the cash to buy more shares, just like a normal DRIP. Within the SSA there are no dealing charges and they also pay interest on any cash balance of 5%, but as there is only ever less than the cost of a new share at the end of each DRIP period to earn interest for 2-3 months until the next one, then it never amounts to much - maybe 20-30p.
However for the Nov div they do things slightly differently. They offer a 'Santander Scrip Dividend Scheme' - SSDS -where you can opt to receive new shares, instead of cash, in proportion to your share holding - this Nov it is 1 new share for every 78 held on the record date. Any residual shares you hold which are not enough to buy an extra share are paid as cash. Within an SSA, this cash balance, when added to your existing balance from the previous DRIP may be enough to buy an extra share. One extra bonus is as this is classed as a distribution there is no need to declare this div on your Tax Return, as with a normal div.
In May this year they announced the possibility, subject to market conditions and the popularity of the SSDS, to offer the SSDS for the Feb '11 div as well, with the May and Aug'11 divs being paid normally as a cash div.
If you have read this far then you are probably more confused than you were before - Sorry!! In order to make the SSA work you really need to be in this for the long term, and not constantly buy and sell your shares. Have a look at http://www.santandershareholder.co.uk/ where they may be able to explain it better than me.