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Am I missing something here?
If the £0.5903 SD and 15/19 consolidation have both been calculated at an assumed share price just below £2.42, won't buying at anything above that price mean anybody doing so is immediately out of pocket come consolidation? Or is it just the short sellers bumping it up to get out just before close tomorrow, meaning the SP drops back below £2.42?
Just a heads-up to any employees who hold Buy As You Earn (BAYE) shares etc in the Share Incentive Plan (SIP) and are thinking about selling any before the SD and consolidation. Looks like you'll need to make a decision or move them before 8th February! If you haven't logged in lately, there's a message within the portal saying:
"Please note that, due to the proposed Special Dividend and Share Consolidation, if you hold shares in the Share Incentive Plan (SIP), you will be unable to access your SIP account and sell or transfer SIP shares between 8 February 2021 and 16 February 2021"
Thanks reader61.
I'm sure you're right on the unknowns of the impact of the Asia sale but a lot of the other impact would be there anyway. I just meant that I don't personally think we'll be any worse off going forward on future, normal dividend payouts than we would have been if the sale hadn't gone ahead. The impact of Brexit etc would be there either way so if they affect the dividend, they will have done anyway. Just my own view of course.
I've decided I'll be leaving my shares to consolidate. They're all in an ISA from past SAYE schemes or in a SIP/BAYE account and therefore all protected from dividend tax so will take the special dividend in cash to reinvest, either in Tesco or possibly elsewhere. I was thinking of selling some to diversify a bit more anyway before this came about. It's certainly not an assumption but I do still believe, rightly or wrongly that dividend payments per share will be improved after consolidation but time will tell eh? At the end of the day we've all gotta make a decision by 11th/12th based on our own holdings, opinions and comfort with risk.
Thanks for replying. Always good to hear others' thoughts and reasonings and take them on board. Be lucky.
quelfromage
As I see it, all else remaining the same..
We'll have less shares, but our future dividend payments will be higher per share and the total dividend payment on an overall par with that paid on our previously held total shares.
ie. We'll have 15/19ths less shares but conversely 19/15ths greater dividend per share making future dividend payment on our total holding roughly unaltered against what it would have been. Eg. A 4% payout becoming 5.06%.
If I were to reinvest my SD I believe I'd have roughly the same number of shares as before but a 25% higher dividend yield going forward
Happy to stand corrected!
cityjambo, I've also got shares that cost over and above some years ago but they're all in my ISA now so they're not liable to dividend tax. I can choose to take the loss and invest the SD elsewhere or, as I understand it, if I reinvest in Tesco then I'll be in roughly the same position as before, allowing for a slight up or down, depending on the old share price when consolidation takes place compared to the price I reinvest at in the new shares. If the latter is lower then surely I and anyone doing this would be in a slightly better position than before? If higher, then yes, a bit worse off but nothing like the difference of the original cost. If I'm wrong feel free anyone to correct me but that's how I understand it from the notices I've received and reading others' more unformed comments.
''Does he convert now and receive the Special Dividend and consolidation or does he miss the Special Dividend and go for the consolidated shares.''
If dates are anything like when mine matured Jan/Feb last year, as I recall the earliest you could make your option was late Feb and the earliest you could then buy at the option price was into early March.
That's my way of thinking Gavster. Though I'm still trying to decide whether to just let it automatically reinvest under DRIP or take as cash and reinvest at my time of choosing when things settle (in case the boys on the market cause the SP to temporarily inflate, knowing that bulk reinvestment purchases will be happening at the same time under DRIP)
Likewise Rosewall. I signed up for the max £500, 5 year SAYE on the basis that I couldn't find anything saying the price would be adjusted or affected by the consolidation. Best chance of making a tidy profit since the £1.50 offer after the accounting shambles IMO. As SAYE is contracted at a stated price from the beginning, with no mention in the contract of an adjustment I'm assuming it can't then be altered down the line. I could be wrong but that's my logic. Worst comes to the worst I can just cancel and take any contributions back or let it run and take my money back at the end if SP is lower then so can't lose either way really. Unless you count the minimal interest it would earn in the bank (though I doubt I'd religiously bank or invest £500 a month if it wasn't taken from my wage without me even seeing it!)
I'm fairly new too but my understanding from reading other, more experienced posters is that, if agreed by shareholders:
1. Yes, there'll be a special dividend of around 51p
2. The share price could well drop by up to a similar amount.
3. There'll also be a share consolidation at the same time, effectively lifting the share price up again but reducing your number of shares held.
4. If you let the special dividend automatically reinvest, you'll likely not end up hugely better or worse off.
5. If you take the dividend as cash, your holding will be worth less, most likely by a similar amount but you'll have the cash to draw on, reinvest at your time of choosing or invest elsewhere.
I could be wrong, but that's what I understand and not expecting to be any better or worse off solely because of the special dividend once the dust settles. Don't know whether the best option is to automatically reinvest or take the cash and reinvest manually though. Would be interested to hear others' views on that.
I'm no experienced investor so feel free anyone to correct me if I'm way off the mark.
I'd be inclined to stick with it for now and wait to see what the option price is for this year's offer. If it's less than 2.19 you can always cancel your existing SAYE scheme, get back your money invested to date and sign up to the new, lower price option for 3 or 5 years instead. I'm not in the 2019 scheme as I had one in its final year already but I've done that myself in the past and will join this year's scheme at max contribution whatever the offer price and just review it each year.