Frequently Asked Questions
Dividends
We have included a list of our most frequently asked questions about Dividends.
- Can I view my dividend payments online?
Yes your dividend payments will show as credit entries on your Account History page.
- Do I pay tax on dividends from International stocks?
Tax on International dividends is deducted at source.
Dividends from US and Canadian Equities
TD Waterhouse operate as a Qualified Intermediary for US and as such we will reclaim tax on behalf of the customers for this specific market. Please note we are not a Qi for Canadian stocks but we may collect tax for these stocks.- Customers Nationality
- W8-BEN status
- The type of dividend (certain rules apply to certain types which influence the tax rates applicable)
Any tax reclaims will be included within the dividend credited to your account. A breakdown detailing the gross dividend, tax withheld and other supporting information is provided within the Consolidated Tax Certificate (CTC) issued to nominee customers each UK tax year end.
Dividends from European Equities
For all other markets (including Ireland) we are unable to reclaim tax on behalf of the customer. Therefore the full withholding tax specified by the issuing country will be applied to the dividend.To help you make a tax reclaim, we can provide you with a Consolidated Tax Certificate for the relevant period. Unfortunately we cannot provide information on how you should reclaim tax from International dividends. Please contact HM Revenue & Customs for further details.
Contact details for the HM Revenue & Customs (HMRC)
HM Revenue & Customs (HMRC)
International Office, Fitzroy House, PO Box 46, Nottingham, NG2 1BD,
Website: http://www.hmrc.gov.uk/international/ - How do I qualify for a dividend?
To qualify for a dividend payment you must be the (beneficial) owner of shares at the close of business on the working day prior to the ex dividend date. For example if the ex dividend date is 9th June:
- You would qualify if you buy/bought shares on or before the 8th June and did not sell before close of business on the 8th.
- You will not qualify if you buy/bought shares on or after the 9th June.
- As long as you buy/bought shares on the 8th or before then you can sell the shares on the ex dividend date and still qualify for a dividend. Whoever is recorded as holding the stock on the record date will receive the payment from the Registrar irrespective of entitlement. The record date is usually within a few days after the ex dividend date. Therefore in certain circumstances a customer may sell prior to the ex-date and would not be liable for the dividend but still be on the company register on the record date and receive the dividend payment. In this circumstance we would contact you, as you would be liable to pay back the dividend payment.
- I have sold my shares before the ex dividend date, what does this mean?
The period running up to the ex date is known as cum dividend. If you buy shares prior to the ex date you will be buying with the next dividend payment attached. The dividend has been declared but not paid by the company, so the market knows how much it is worth and the price you have received for your shares will have reflected this. If you sell shares cum dividend and are removed from the register in time, you will not need to do anything because you will not be paid by the Registrar. If there isn't time to update the register you will receive the dividend and will need to pass it on to the buyer. As your broker we are responsible for claiming the dividend from you to pay to the buyer of the shares. Dividends can also be paid in the form of stock (SCRIP dividend), but we will claim the cash equivalent from you to pay to the buyer of the shares.
- What happens if I buy shares before the ex dividend date?
If you buy shares cum dividend (before the ex date) then the price of the shares will have reflected the fact that you have also bought the right to the dividend. The dividend will then be claimed from the seller of the shares to pay to you on or soon after the payment date. As your broker, we will be responsible for claiming the dividend on your behalf.
- What if I sell my shares on or after the ex dividend date?
On the ex date, the share will go ex dividend. This means that it is being offered for sale without the dividend. If you sell an ex dividend share, you will keep the dividend payment. But again, the price of the share will reflect this - it will have dropped from it's cum dividend price.
- What is the Cum dividend?
Purchase of a share cum dividend means that the buyer of a share is entitled to the next dividend payment (opposite of ex dividend) For example, if the ex dividend date for a stock is on 3rd March, then to be entitled for the dividend payment you must hold the stock as of midnight of 2nd March.
- What is the difference between DRIP and SCRIP dividends?
DRIP dividends
Please note that TD Waterhouse does not offer the DRIP dividend service. Customers with a certificated holding may contact the company's registrars to arrange for a DRIP dividend to be setup, providing that the DRIP dividend is available for the stock in question. Dividend reinvestment plans give shareholders the opportunity to use the cash dividends on their shares to buy more shares in the same company. Shareholders receive as many whole shares as can be bought with their dividend, taking into account any costs of the DRIP. As part of a DRIP existing shares are purchased in the market are subject to stamp duty and commission. Any residual cash is retained within the plan.SCRIP dividends
With a Scrip dividend, new shares are issued by the company, which can be acquired by investors instead of a cash dividend payment. The SCRIP reinvestment is offered by TD Waterhouse, however only a select number of companies offer the SCRIP reinvestment.The SCRIP dividend provides additional benefits for shareholders by avoiding dealing and stamp duty costs.
Important Notes
1. Companies may offer either SCRIP or DRIP dividends, but not both.2. We do not offer a DRIP service for stocks held in Nominee, nor do we offer automatic reinvestment of dividend proceeds.
3. We do however offer a SCRIP service. Nominee Customers can establish a mandate on their nominee account but not on individual holdings. Any dividends paid on nominee stock where the company offers a SCRIP alternative will be converted into shares and any residual cash balance will be credited to the account.
4. Certificated shareholders need to contact the Company Registrar to establish a mandate for either SCRIP or DRIP.
5. We have no control over whether a company that currently offers a reinvestment service will continue to do so.
- Where can I find company dividend information?
You can find detailed company dividend information including dividend history and future dividend dates as follows: Go to the Company Data and Charts page under the Markets & Research menu. Use the Company Search to find the company you're interested in. Choose Financial Data, then Dividends History on the left-hand menu.
- Why doesn't the Company Registrar just pay the dividend to the right shareholder?
With certificated transactions it takes time to transfer the shares from the seller to the buyer. This means that the register may not be updated on the record date, which is the date that the Company Registrar uses to work out who to pay. This is why the claim process is in place between stockbrokers such as ourselves.
- Why don't you tell customers when the ex dividend date is before they place a trade?
This would be considered by our regulators to be giving advice. As an execution only broker we merely buy and sell shares on your behalf so we can't offer this information. However our representatives do have access to this information so you can ask for the ex dividend date before trading if you wish to know, and it is available online via the Markets & Research section of the TD Waterhouse website. In addition, this information is readily available on financial websites, including our own site, in the financial press and from the companies themselves.
- Why has my dividend payment been claimed back?
If you have sold a stock prior to the ex-dividend date but the deal does not settle until after the Record date then you will receive a dividend, however you will not be entitled to it. In this situation we will claim the dividend back and pay this to the market conversely.
- Why have I not received a dividend payment?
To qualify for a dividend payment you must be the (beneficial) owner of shares at the close of business on the working day prior to the ex dividend date. If you have not received a dividend that you believe should have been issued to you, please ensure that you verify the correct payment date for the dividend.
You can find out the payment date for a stock by logging onto the TD Waterhouse website and selecting Company Research which is located under the Markets & Research section. Once you are in the Company Research page, simply enter the name of the stock into the Quick Company Search box and click on Go. Once the stock details have loaded, simply select the Key Dates option to view details on the company's dividend payments.