Posting of Reinvested Stock

[gregc]

Hi Mark
Apologies if this has been dealt with before, but I'm unable to find a related post.

I am trying out FM and have hit a small snag on one of my dividends and I'm not sure how to enter such into FM (all done manually - no feeds from broker here). Could you advise?
The distribution (summarised) is as follows -
"An interim dividend declaration of 0.07263 cents and a debenture interest payment of 72.62737 cents per linked unit which equates to an amount of 72.70 cents per linked unit held in the Company" - "Re-invest the net cash distribution, after the deduction of the applicable dividend withholding tax, in return for Linked Units at a price of ZAR25.25 (Reinvestment Price) per Linked Unit. Linked unitholders who are not exempt from dividend withholding tax shall receive 2.87878 Linked Units for every 100 (one hundred) Linked Units held. If the link unitholder's entitlement to the Linked Units gives rise to a fraction, the conventional fractional principles shall apply. In the circumstances, the fraction will be rounded to the nearest whole number where the fraction is greater or equal to 0.5 and rounded to the nearest whole number where the fraction is less than 0.5."

In my case I have a fraction remaining of less than 0.5.
Now, in entering this, I would need to split the Dividend received and the interest received as two seperate distibutions - not a problem. and I can show this as credits to my Cash Account (although this did not actually occur). But with the re-investment, what would the purchase price be if stated at 25.25 per unit yet I will not get any value for the fraction. I could either -
- apply the fraction value as a Commission fee on the purchase (but that would affect the cost/value ratio).
- apply the fraction value as a sell out of the Cash account (which actually did not occur as no funds were applied to the Cash account by the broker (other than the Tax debit) - just shares increased in my holdings).
Your or any other user's advices will be appreciated, thanks.

[Mark]

Hi gregc,

If I understand correctly, you are receiving a dividend/interest, and reinvesting it into a stock. The reinvestment is rounding (down in your case) to the nearest whole share. I would record it depending on what actually happened and was reported by your broker. It sounds like you didn't receive any cash for the partial share, you just only got a rounded down number of shares? How does the broker report this on your transaction confirmation or account statement?

If it was reported that you received the full amount of distribution/interest, but a lesser number of shares for the reported purchase price, and you didn't end up with any cash, then this seems like either your purchase price for these shares was higher than reported, or you paid it in commission. I would try to record it as your broker shows it for your account.

[gregc]

Thanks for the reply Mark.
The weird part is that my broker posted the Divi Tax as a debit to my account (as per normal), and then a 0.00 transaction for the Reinvestment. I suppose I could post it that way as well, but would that not have an effect on the yeild?
Regards

[Mark]

Hi gregc,

Yes, that would impact the yield. I would record the reinvestment for the value of the distribution/interest that was spent buying those new shares.