A 'dividend' is a distribution of profits to eligible shareholders, usually paid out on a regular basis. When a company pays a dividend, you can elect to receive it in cash or to have the dividend automatically reinvested on your behalf into more shares in that company. Not all funds or companies pay dividends, and not all companies or funds offer dividend reinvestment.
Dividends are managed by a 'share registry', which is an organisation contracted by the security issuer to manage the registry of shareholders for that company. To receive your dividends, you will first need to contact the registry and provide dividend election details.
For more information on share registries, and how to find out which one manages your holding click here.
Please note: this article discusses dividends for ASX holdings. For information on receiving dividends for your international holdings please click here.
How do I receive my ASX dividends as cash?
To receive your dividends as cash, you will need to provide the share registry with your bank details so that they know where to deposit the money. As Selfwealth does not manage dividends, you will need to speak to the share registry directly. You can provide the share registry with your Selfwealth cash account details to receive dividend payments directly into your Selfwealth account.
How do I automatically reinvest my ASX dividends?
A 'Dividend Reinvestment Plan' (DRP) instructs a company or share registry to reinvest any dividends paid to, the shareholder, as new shares. If you wish to participate in DRP you will need to contact the share registry that manages your stocks and register for DRP participation.
When this happens, the share registry will advise Selfwealth that you have more shares or units and your Selfwealth account will update to reflect this. It may take up to one week for the shares to reach your Selfwealth account once they are issued.