Learn how dividends are calculated and paid—cash dividends, auto-invest dividends, and dividend reinvestment plans (DRPs).

Sharesies Help avatar
Written by Sharesies Help
Updated over a week ago

If a company or fund you invest in makes a profit, it may choose to give that profit back to its shareholders in the form of a dividend.

Not all investments pay dividends. Some companies or funds might choose to reinvest their money instead of paying it out as a dividend. Even if an investment has paid a dividend before, it doesn’t guarantee that it’ll pay a dividend again in future.

When dividends are paid

To see the upcoming dividends for an investment, select the investment in Sharesies and go to Gross dividend yield > Upcoming dividends.

The gross dividend yield (GDY) percentage also shows a representation of the historical returns in relation to the current share or unit price.

The percentage is calculated by taking all of the dividend payments for the past year per share, divided by the current share (or unit) price.

How dividends are calculated

Generally, the total dollar amount of dividends is divided by the number of eligible shares or units. How much you get usually depends on how many units or shares of that investment you own on the ‘ex-dividend date’ (the date that eligible shareholdings are calculated).

Dividend payments for American depositary receipts (ADRs) are calculated on the amount of receipts you owned on the ex-dividend date.

Ex-dividend date

If you own shares, units, or receipts in an investment before the ex-dividend date, you’re entitled to the next dividend payment. If you invested on the ex-dividend date, or after, the current dividend payment would be paid to the previous owner of the shares, units, or receipts.

If you’re an existing investor in a company, and buy more shares, units, or receipts on the ex-dividend date, you’d only be entitled for the dividend payment based on the shares you owned before the ex-dividend date.

For example: when you buy a share, there’s someone selling a share on the other side of the trade. If the ex-dividend date is 31 August, and you buy the share on this date, usually the dividend belongs to the seller. If you’d made the purchase on 30 August, the dividend would usually be paid to you.

How cash dividends are paid

Cash dividends are paid into your Sharesies Wallet in the same currency as the investment. For example, New Zealand dividends are paid in NZD, US dividends are paid in USD, and Australian dividends are paid in AUD.

You can choose to reinvest that money into an investment of your choice, or withdraw it to your bank account. If you want to withdraw an Australian or US currency dividend, you’ll need to exchange the money into NZD first, and then withdraw it into your NZ bank account.

Auto-invest dividends

You can invest dividends back into a company or fund automatically by going to your investment portfolio > Manage > Dividend reinvestment. Currently, you can only auto-invest dividends back into the same company or fund.

You can customise which dividends you want to invest. You can also choose to auto-invest a dividend once, or auto-invest every dividend you receive from an investment. This takes place through a typical buy order.

Transaction fees will apply, and will be taken from the amount you’ve received in dividends and selected to auto-invest. If you’re on a plan, these fees will be covered in your auto-invest quota (providing you still have coverage available in the month the dividend hits your Wallet).

If you have push notifications enabled, you’ll be notified each time a dividend is paid to your Wallet. You can choose how often you hear from us at any time via notification settings.

How to opt out of auto-invest dividends

You can turn off auto-invest dividends by going to your investment portfolio, then select Manage > Dividend reinvestment. If you turn it off, or a dividend can’t be invested for whatever reason, it’ll be paid into your Wallet.

Future dividends will be paid into your Wallet, but won’t be invested. Dividends due on the day of cancellation may still be auto-invested.

Dividend reinvestment plans (DRPs)

Some investments offer a dividend reinvestment plan (DRP). If you opt in to a DRP through Sharesies, you’ll receive shares instead of a cash payment if the investment issues a dividend. You don’t pay a Sharesies transaction fee when you receive shares through a DRP.

If an investment on Sharesies offers a DRP, you’ll see Dividend reinvestment plan available on the investment page, under the investment description.

You need to be an existing shareholder to opt in to an investment’s DRP. Go to the investment’s page and select Dividend reinvestment plan available > Learn more. Be sure to read and understand a DRPs offer document before opting in.

You can view and manage your DRPs by going to your investment portfolio, then selecting Manage > Dividend reinvestment.

Receiving shares through DRPs

If you opt in to a DRP before an announced dividend’s ex-dividend date, you’ll receive shares for that dividend (and any following). If you opt in after the ex-dividend date, you’ll receive cash, but you’ll receive shares for any following dividends.

Shares issued through a DRP get added to your Portfolio. If you receive a dividend, it will show in your Portfolio’s Activity feed and under Your investment > Investing activity on the investment’s page.

Tax for DRPs

Share dividends are taxed like cash dividends. If you receive a dividend through a DRP on Sharesies, we ask for a portion to be paid in cash so that we can pay the correct amount of tax to Inland Revenue (IRD) on your behalf.

This happens in the background—you only see the new shares in your Portfolio, and the tax paid in your end-of-year Sharesies tax statement.

How to opt out of a DRP

Go to the investment’s page and select Dividend reinvestment plan > View > Opt out of plan or go to your investment portfolio > Manage > Dividend reinvestment and opt out.

As long as you hold shares in the investment, you can opt back into the DRP at any time.

Did this answer your question?