dividend reinvestment

[ben.com]

Hello Mark,

I want to register a reinvested dividend and I wonder how I should register the balance of the dividend. As I'm french, I prefer to take an example

For example :
share : 100
dividend : 0.5 per share
==> gross dividend = 50

reinvestement price : 15
reinvestment number : 4
==> balance of dividend = 50 - 15*4 = - 10

How should I regsiter this -10 ?

Thanks

[Mark]

Hello,

If the dividend amount is different than the amount you spent to buy additional shares, you may want to record it as a separate dividend plus a purchase. Alternatively, you can record the dividend as reinvested for part of the shares you bought, and a separate buy for just the difference between what the dividend paid for and what you spent out of pocket.

Option 1: Record a distributed dividend for 50. Record a purchase of 4 shares for 60.

Option 2: Record a reinvested dividend for 50/15 (3.333) shares for a total of 50. Record a purchase of 10/15 (.667) shares for a total of 10.

Both are equivalent in terms of performance.

[ben.com]

Thanks for your answer.

The important point is that both solution are equivalent in term of performance.

So, I think I made a mistake. I register :
- a reinvestied dividend for 4 shares @ 15
- a distributed dividend for -10
I think this is not a good for the performance, isn' it ?

[Mark]

That isn't quite the same... I would record it with one of the 2 methods I mentioned, as it more accurately reflects what happened.

[ben.com]

Yes you're right.

But I want to follow my portfolio performance dividend included and dividend excluded.
So I think that option 1 and 2 have not the same impact in term of those two performances.
With the option 1, I register a distributed dividend of 50. I bought for 60
With the option 2, I register a reinvested dividend of 50. I bought for 10

Are distributed dividend and reinvested dividend treated the same way in the performance ?

[Mark]

A reinvested dividend is exactly the same as a distributed dividend plus a purchase when it comes to performance. In both cases you have 50 of dividends and 60 of purchases.