I was wondering if it was possible to DRIP , I gotta put a dividend on the stock but sometimes the cost it isn’t equal , if there was a dividend or interest that you get paid in shares. Useful too on crypto since I get interest in crypto paid in coins and that value tends to differ.
Dear Goncalo_Barreira,
if I get you right you are referring to dividends which are paid in form of securities rather than in form of a currency.
In PP such payments would be realized as receiving dividends in money and a purchase of the corresponding security.
I hope this helps
Hey , Ive been doing that but sometimes for cryptos and stocks the price that the dividend (paid in securities) doesn’t correspond because when buying the security for the drip tends to be in extended hours and that price and I can’t have with the quotes given since those aren’t considered open, and in cryptos its always hard to get the price right.
Hi there
Just I would like to know if you have in the roadmap to add DRP in the platform as the process to bring to cash and buy again shares impacts the calculated profit in the system.
This feature is really common nowadays and it would be nice if you could consider adding to this fantastic software.
Thank you and regards
For a DRIP the company takes the money they would normally pay out to you and buys additional shares of their own company for you. So it is no different than you receiving the money and then buying shares. So from my perspective (and most contributors, if not all) there is no need to program a “new” feature, that already exist.
regarding profit calculation (I guess you are referring to dividends paid to you), you could create an account where all DRIP dividends are paid to and exclude this from your Dividend evaluations
Yes, there is a clear different as when you see the asset and their profit. I am not wrong the platform calculate this profit based of the difference between cost and the value of the market, so it does not see the dividend as a 100% profit for this new shares.
It just my view and I think it would be nice to have this feature. Is there any technical issue to deploy this feature ?
If you are looking at it on a share basis then you are right. In a trade evaluation you would not see that you just sold a share that you got “for free”. But this would also be true if you combine the two separate actions dividend an buy into one “new” feature “stock dividend”.
from a performance standpoint there is no difference (hence this “workaround” is suggested) since the dividends are of course included into the assets performance.
Yes you are right.
I am understand that there is a workaround.
I just wondering if this feature is on the roadmap as I believe it is common in the industry.
Regards
no it is not on the roadmap (as far as I know) since it is no new feature and there is no real benefit in squeezing two functions into one (besides adding bulk to the UI and have minor usability benefits)
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I think an option to simulate dividend reinvestment is good for benchmarks. Currently, benchmarks in “Performance > Chart” or “Performance > Return/Volatility” are inaccurate because dividend paying ETFs look much worse in performance measures.
I think most data sources allow for historic prices on a total return basis. As an alternative, if an accumulating version of the ETF exist use that as a benchmark.
Thank you.
Yes Yahoo Finance does have an “Adjusted Close” option for total return.
If I change the data source to that for securities I own, that will mess up historical pricing and give me wrong performance, so I have to create a separate instrument for benchmarking.
PP won’t let me add two instruments with the same symbol, but it works if I create “empty instrument” and fill in details.
Is this how other people create benchmark indices?
Hi All
I think that manucob13 is correct, and that something is wrong with the way that PP handles DRIP transactions, even when the workaround is used.
For example: I buy $1000 of shares in a company, then that company pays out $50 in a DRIP program. If I enter this as a $50 dividend, and then as a separate $50 purchase of shares, I would effectively have $1050 of shares and everything looks good at first glance.
Then the value of those shares increases to $1200. PP will now show that the absolute performance of those shares is $1250 ($1200+$50 dividend), which is incorrect. All I actually have is $1200 worth of shares. The DRIP payment and reinvestment has been used to achieve this.
One possibility to correct this would be to declare x amount of shares purchased for $0 (instead of the two transactions above), since you effectively got the shares for “free” as part of the DRIP scheme.
However, you would then lose any data about dividends.
Perhaps I am missing something.
No, it won’t; the absolute performance is $200, which is correct ($1200 minus $1000 originally invested).
Hey johnparker8,
if you had gotten the shares for free, your 50 USD would be around somewhere physically then.
I am literally looking at my portfolio where it is showing absolute performance as capital gains + dividends.
Thats why i searched for and joined this conversation.
I could send a screenshot if you are unconvinced
This is why i wrote that the shares were “free”. Of course they arent really free, they are purchased with the dividend.
They are only free in the sense that you didnt need to use any of your own money (ie: make a deposit into your trading account) to purchase them.
Sorry if that wasnt clear
Hey johnparker8,
I understand where you are coming from. I think with finances it is important to put feelings aside.
In this case it correct that you did not put anything into your trading account, but your bank did when it paid the dividends. PP, as well as others do not care who paid for the stock, but somebody did.
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You can handle it as dividend + buy (as other users already mentioned) or as ‘Delivery (Inbound)’. The former one has the disadvantage for dividend investors who want to track real dividend cashflow and the latter one has the disadvantage it does not affect the performance. Most users choose to track the real performance I think.
You have to choose what you want to look at. But let’s say you want to handle it as dividend + buy for the real performance.
So the performance in total numbers is $200:
$50 dividend (“free” shares of reinvestment)
plus $150 (because of the increase from $1050 to $1200 afterwards)
If you don’t want to handle it as dividend + reinvestment you can use Delivery (Inbound).
Delivery does not need a deposit account. You just get the shares. But then you “lose” the performance of the dividend-like reinvestment and only a performance of $150 will be visible.
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This is gold, thank you _Manuel!
I understand how this works now.