Dividend Reinvestment Plan — OCBC Bank (O39) and CapitaLand Retail China Trust (AU8U)

So recently I had to make a decision on the DRIP options for both OCBC Bank (OCBC) and CapitaLand Retail China Trust (CRCT).

dividend reinvestment plan (DRIP), when given the option to exercise by the company, allows investors to reinvest their cash dividends into additional shares of the stock (or known as scrip dividends, at a discount to an average weighted price) on dividend payment date.

I ended up choosing scrip for OCBC and cash dividend for CRCT.

OCBC Bank (O39)

  • Current price (25 Aug): $8.76
  • DRIP price determination reference: $8.67
  • DRIP price of new share: $7.81 (10% discount)

CapitaLand Retail China Trust (AU8U)

  • Current price (25 Aug): $1.14
  • DRIP price determination reference: $1.213
  • DRIP price of new share: $1.200 (1% discount)

Rationale

Unlike some investors, I am indifferent to holding odd lots if the price is good, though I understand the hassle of selling off the odd lots in future.

I am effectively getting a better deal for OCBC, with an 11% discount if I were to compare against today’s price. For CRCT, I am akin to ‘paying a premium’ to hold on to more shares. Some may argue that even though the DRIP price is 6 cents higher, it allows an investor to own more shares of a good stock via DRIP and bypassing brokerage commission / market fees.

Another key difference I noted was that for OCBC, fractional share is rounded up to the nearest whole share; for CRCT, it is rounded down. This is another ‘loss’ for CRCT, making it less appealing for me.

As a result, the scrip/cash dividend decision for this time round is rather straightforward in my opinion.

5 thoughts on “Dividend Reinvestment Plan — OCBC Bank (O39) and CapitaLand Retail China Trust (AU8U)

  1. Hi
    How to apply for Ocbc Drip program? For your kind advise.
    Is it still in time for the impending dividend payout?
    Thanks.

    Like

    1. It depends if you are using a custodian or CDP.

      For CDP, you may submit your elections electronically via the SGX-SFG service provided by CDP as listed in the Terms and Conditions for User Services.

      For custodian account, your custodian will inform you of the corporate action. You may usually exercise it online via the platform.

      E.g. I’m using SCB, so I received this:
      Dear Customer,
      Please be informed of a corporate action event that requires your action.

      Event Type: Dividend Option
      Stock Name: OCBC BANK
      Event ID: DVOP2020645504002
      Action By: 16 September 2020 05:00 PM

      Please respond on or before Reply Date via SC Online Trading Platform.

      Standard Chartered Bank (Singapore) Limited.

      Like

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