Holding shares in Fidelity - can I join a DRIP scheme?

[Dr Mike Oxgreen]

I'm something of a newbie at holding individual shares, and still learning the best ways of doing things.

I have a S&S ISA with Fidelity, and currently have a portfolio of 12 shareholdings. One of those is Carnival PLC (CCL.L). The problem I have is that due to the high share price (currently around £50) and due to my fairly modest shareholding, dividends will never be enough to buy even a single share. My dividends are typically about $20, or around £15, and I have to hold that money as cash in the ISA until it gets used to pay the next service fee.

I note that Carnival (with the share registrar Equiniti) run a DRIP scheme. If I understand correctly this would hold my dividends and accumulate them until they're enough to buy one or more shares. I have also read that DRIP schemes typically charge a much lower fee for purchasing shares (I currently pay £1.50 per reinvestment if I let Fidelity do it, which is rather expensive for smaller dividend payments).

My questions are:

• If I've bought my shares through Fidelity, will the registrar Equiniti know who I am? Are my shares still registered with Equiniti as an individual shareholder, or are all of Fidelity's holdings in that share registered as one great big lump? I certainly don't have a shareholder reference number, so if I contact Equiniti I'm not sure how I would identify myself to them.

• Assuming Equiniti are aware of me as an individual investor, and perhaps if Fidelity will tell me what my shareholder reference number is, can I join the DRIP scheme for Carnival?

• If I've joined the DRIP scheme and it buys some shares on my behalf from accumulated dividends, will those shares automatically show up in my Fidelity ISA, or will those shares be a separate shareholding outside my ISA? If the latter, is it relatively easy to move them into my ISA?

I guess I'm really asking what is the best way of managing dividends when you've bought shares through a platform such as Fidelity etc.

Many thanks!

[Dr Mike Oxgreen]

Any thoughts on this?

How do people manage their dividends when buying shares through a platform like Fidelity, Hargreaves Lansdown, etc?

Do other platforms provide a facility to accumulate dividends until they’re big enough to buy a share in the case of stocks with a high share price?

In the case of Fidelity, it provides the option to reinvest dividends, or hold them as cash in the account, or pay them out to an external account. But there is no option to accumulate dividends, so if it’s insufficient to buy a share (or small enough to make the £1.50 reinvestment fee a large percentage of the dividend) then the only sensible option is to hold as cash.

Would really appreciate hearing how other people do things!

[Dr Mike Oxgreen]

Just in case anyone else comes across this thread and wonders what the answer is, I can now provide the answer. I contacted Fidelity, and I’ve since done a bit of further research to better understand how shares are held in a platform such as Fidelity.

No, you can’t join a DRIP scheme. And this probably applies to most, if not all, share trading platforms.

The reason is that you as an individual investor are probably not actually a shareholder if you’ve bought shares via a typical platform. Typically, shares that you buy are bought on your behalf by a trust and held in a pool along with the purchases of all the other customers of the platform.

You are merely a beneficiary of the trust - if you were to contact the registrar that manages the shares of Acme Widgets PLC, they would have no record of you because you aren’t really a shareholder. The registrar is the body that runs any DRIP scheme associated with Acme Widgets PLC, and in order to join the scheme you have to be a shareholder with a Shareholder Reference Number. As a pseudo shareholder who is merely a beneficiary of your platform’s pooled shareholding, you do not have your own reference number and therefore you can’t join the DRIP scheme.