subject: Joseph Wang Financial - Programs Reinvestment Of Dividend [print this page] The big Spanish banks (Banco Santander, BBVA, Banco Popular) and any other company, such as Iberdrola, have programs of reinvestment of dividends to its shareholders. For example, dividends that are charged to the shares of Banco Santander which are held in the portfolio are used to buy more shares of Banco Santander.
To qualify for these plans only have to deposit the shares in the bank itself (or any of its affiliates) and apply. That is, if you buy shares of Banco Santander must be deposited in Banco Santander or Openbank , if shares of BBVA BBVA have to file it or Uno-e , etc. Dividends received are automatically entered into a special account (the account that is associated with reinvestment plan), which usually gives a higher interest account to the rest of the market. Once a quarter the bank itself is responsible for purchasing the maximum possible actions with the money accumulated in the account automatically reinvested. It is sometimes possible to make additional income from reinvestment those accounts to buy more shares when the time of reinvestment. This should be consulted about conditions then current, as they may vary. These extra income sometimes allowed to any other shareholder and only children of a certain age.
There is no minimum amount for these reinvestment plans, and the purchase of the shares is free of fees and expenses for shareholders.
Such schemes should only be done by selecting the company very well chosen from a fundamental point of view and a very long-term vision. These 3 banks, and Iberdrola, the conditions necessary to be good investment options in the very long term. They are very solid company and its earnings per share ( EPS ) and dividends per share ( DPA ) rise in the long run and on average, at rates higher than inflation. Furthermore, and importantly, their outlook is very possible that in the future and continue increasing its GAP DPA above inflation.
The dividend reinvestment plans are a good choice for long term investors who do not want to spend time with the stock or not enough knowledge for it. The long-term profitability is very attractive, and it is very likely to exceed the return on the IBEX 35, as stock indices (IBEX 35 included) do not include dividends .
A disadvantage is that you can not choose when to buy, but choosing the right time is available to few investors. The investment at regular intervals of time very solid values is a good strategy. Maybe not the best, but it's really hard to beat in practice.
These plans can be used at any age, but I seem especially suitable for young children, and generally saving the children is done based on small numbers and have no idea about it until they reach adulthood so. These plans combine a very good long-term profitability with a very low commissions (rollovers are exempt from fees and commissions and the receipt of dividends from shares in a bank at the bank usually too). The extra income reinvestment accounts are usually allowed for minors, which facilitates investment of the money made on birthdays, gifts, etc.. that otherwise would have to pay some fees too high for the amount of a purchase of ordinary shares.
If possible would be preferable to diversify the money among the 3 banks, and Iberdrola. No need to open the 4 plans at once, can be done over time. The low fees associated with this investment (even lower than normal operations on the Stock Exchange) make it possible for virtually any investor diversification.
At the time you want, without penalty, may suspend reinvestment plan and use the dividends for any other purpose , such as personal spending, reinvested in other shares, paying a mortgage, etc..
by: Joseph Wang
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