When it comes to receiving a dividend it may either be in the form of cash or in the form of more shares in the company. EasyEquities allow you set your own preference for how the dividend is treated. You can change your preference for your entire account under the Account Preferences menu or you can change it for an individual share on the Account Overview page under each share that you have.
For non-elective events (corporate actions with only one option) you can select to either receive the cash dividend paid to your account or have the cash automatically re-invested into the same share. For elective events (corporate actions with more than one option) we will use your preference to determine whether you would like the cash or shares. You will still receive an email from us for elective events outlining the different options and as a reminder to update your preference if you would like to.
Take a read below for the difference between the two types of events when you opt to re-invest any dividend.
Any individual share preference will be applied instead of your account preference for that specific share. Your preference will be applied to all future corporate actions unless changed.
Payments made into your account as a result of a non-elective Dividend/Income distribution can either be paid into the cash portion of your account or automatically reinvested into the instrument that paid out. This Dividend/Income distribution would ordinarily just be paid into your account, so we are taking away the hassle of you having to invest this cash yourself if you want the payout reinvested back into your holding. This is still a normal transaction, which means you will incur the standard fees. We will simply reinvest the net amount, which is the Gross dividend amount Less any necessary deductions declared by the issuer (e.g. Dividends withholding tax, issuer portfolio costs (ETF’s), other expenses) and transaction fees incurred.
Gross dividend = R100
Less Dividend withholdings tax = R20 (R100*20%)
Net Reinvestment amount = R80
In this example we would reinvest R79.69 (R80 investment costs) from the net dividend amount of R80 paid into your account if you had elected to reinvest the proceeds.
An elective event requires an investor to make an election on a specific type of Corporate Action for cash or shares. Elective events that normally involve a dividend payout are Dividend Reinvestment Plans (DRIPs) or Optional Dividends. In both cases, you can either elect a cash payout or more shares in your holding. These events take place in the market, therefore you do not incur any transaction fees through the platform. The only fees you incur would be stipulated by the issuer, which in turn will be communicated to you through the Corporate Action notification you receive.
Please click on the Links below for examples of elective events: