Sunday, December 02, 2007

HSBC dividend

Just received a letter from POEMS telling me about the procedure and fees to receive cash or script dividend for my HK stock - HSBC.

Book close date: 23 Nov 2007
Cash dividend per share: Approximately HKD 1.326
Reinvestment price: Not yet confirmed
Max entitlement to new share dividend: Book close quantity x appr HKD 1326/Reinvestment price

Should I take up the script dividend option, I will be charged:

1. HK collection fee of 0.5% of total dividend amount
2. HKD 2.5 per lot
3. PSPL handling fee of $10 plus 7% GST - a total of SGD 10.70

I have to state my written decision clearly (there is a form to check the option you want) and return the form to POEMS by 13th December 2007. If they did not receive confirmation by me, then the default option is to receive all dividend in cash. I understand this once sent, this option will be the standing instructions for the optional dividend of HSBC until I opt out from it by either emailing at or write in to the company address.

Not sure if the reinvestment price is the average closing price of the last five days prior to XD or the average close of the first 5 days on and after CD. Let's assume it's the last 5 days before XD - it's 131.64.

Since I have 1 lot = 400 shares, if I accept the cash dividend, I'll get HKD 530.40 = SGD 99.48 (based on exchange rate of 0.18755). If I want the script dividend, I'll get 4 new shares (530.40/131.64, assuming reinvestment price of 131.64, then rounded down). Further more, I need to pay HKD 2.652 collection fee (0.5/100 x 530.4) and HKD 2.50 (based on 2.50 per lot - dunno pay for what) plus another PSPL handling fee of SGD 10.70.

That works out to be a total of HKD 5.152 = SGD 0.966 + another SGD 10.70, a grand total of SGD 11.67! Wah, like that eat up almost 12% of my dividend already. I think I should get more HSBC shares to average down by cost, otherwise really not worth it.

If I own 1 lot, my cost of script dividend is 12% of dividend
If I own 2 lots, my cost is 6.4%
3 lots, cost is 4.6%
4 lots, cost is 3.7%
5 lots, cost is 3.1%

I think optimally, 2 lots to 3 lots is reasonable, bringing down the cost of having script dividend at 4.6 to 6.4%. I would prefer to lower it down to near 3% with a total of 5 lots, but as it is, this will have to wait, haha :)

I think i'll go for the script dividend. Never mind the cost, I'll try to lower that down by buying more lots. I prefer to compound it with them then taking the dividend out. Okay, that should do it.

Singpost chart is shown below:

Price fell to 38.2% fibo retracement zone, a very good level to expect a rebound. Probably going to get more singpost at 1.08/1.09 level, see if I can get it tmr. The price is around 1.12 before pre-close matching brought it down to 1.09. Let's see how tmr. Getting interesting :)