Normally, I do not publish posts over the weekend, but I wanted to segregate this topic from my frequently long posts written during the weekdays. I hope to have more analysis ready by next Sunday.
Something told the OG to compare the reinvestment prices of dividends among brokers. Perhaps, lurking deep in his unconscious mind, there was a realization that something was amiss. And, since more than one conscious thought can not occur at a time in his mush of an aging mind, it took awhile for the one discussed below to percolate to the surface.
I own some dividend paying stocks in two or even three accounts, and I am reinvesting the dividend in all accounts. You would think that each broker would have the same price.
WRONG! There was not a single common reinvestment price. Most disparities were significant on a percentage basis. I will devote a section in a later post to this topic after I perform a more comprehensive analysis which will take time.
I was shocked about what I found. The following three examples highlight the issue. In these examples, I am comparing Schwab and Fidelity. Schwab usually takes a day longer to process the dividend than Fidelity, but the following snapshots are for the same dividend payments:
ADX Schwab Reinvestment Price $10.1273
ADX Fidelity Reinvestment Price $10.4215
Schwab FNFG Reinvestment Price $8.4282
Fidelity FNFG Reinvestment Price $8.7918
Sharebuilder used a $8.48 reinvestment price for this FNFG dividend.
Fidelity had the lower price as shown in the following two snapshots:
Schwab BDGE Reinvestment Price $19.664
Fidelity BDGE Reinvestment Price $18.7464
Vanguard used a $19.625 reinvestment price for the BDGE dividend.
That is a substantial difference between Fidelity and Schwab for BDGE.
To my knowledge, this is the kind of issue that has never been discussed in comparisons made by financial magazines of different brokers.
I requested an explanation from Fidelity and Vanguard. I am not going to waste my time with Schwab. I would not expect a satisfactory answer from any broker on this kind of issue.
Another serious issue, mentioned in two previous posts, is the differences among firms in the amount withheld for foreign taxes. Item # 2 FTE Dividend-Withholding Tax; Item # 3 Stocks, Bonds & Politics For the recent dividend paid by France Telecom, Fidelity and Vanguard withheld 15%; while Sharebuilder, Ameritrade and Schwab withheld 30%. So at a minimum, I will no purchase dividend paying companies located in France in my Sharebuilder and the Schwab testamentary trust account. I believe that Vanguard and Fidelity made "relief at source" filings. dtcc.com.pdf The others did not want to go to the trouble and/or to incur the minor expense.