Reinvested dividends: ReinvDiv or Buy Shares?

steveogetsatis

I'm beginning to track my IRA in Q17 and am entering historical dividends reinvested as stock shares. The question I'm going to ask doesn't deal with the cost basis of the stock from a tax standpoint, as the account is non-taxable, but rather with keeping track of the adjusted purchase price of the stock from a performance standpoint. I'm trying to figure out whether to enter a reinvested dividend as Reinvest - Income Reinvested or as Buy - Shares Bought. My problem with ReinvDiv is that I don't know the share price on each dividend payment date. In any event this results in a positive price per share for these reinvested shares as of that date when I would think it should be zero to permit a recalculation of an adjused purchase price. I think I understand the ReinvDiv calculation to reflect the cost basis of the reinvested dividend in a taxable account. If I use Buy - Shares Bought, I can plug in $0 as the price paid. Thanks for any guidance.

mshiggins

You don't need to know the share price. Just enter the number of shares and the amount of the dividend. Quicken will calculate the price per share.



I prefer the reinvest dividend transaction as it does not change the amount invested. Amount invested is used in performance calculations.

steveogetsatis

I had tried ReinvDiv and have just realized what my problem was.  Q17 kept coming up with the same price/share.  I had been adding the online Fidelity number for the dividend amount, but I now realize that's the current value.  I have to go back to the initial statements to get the dividend value at the time.  PITA, but that's that's the only choice if I'm going this way.  I accept that ReinvDiv is the correct method.  Thanks for your advice.

q_lurker

You have two "proper" choices:

1. To enter transaction as a ReinvDiv, providing the Dividend $ amount and the number of shares and letting Quicken calculate the price/share, or
2. To enter a DivInc transaction for the dividend $ amount, followed by a Buy Shares amount where you again supply the number of shares and the dividend dollar amount.  

Both ways are equally right and both ways will lead to a valid calculation of Average Annual Return.  The two methods will yield somewhat different values for ROI (Return on Investment) since the ReinvDiv approach does not include the dividend received as shares in the Amount Invested.  

The price per share should never be treated a zero.  

The above comments apply without regard to the type of the account - taxable, retirement, IRA, 401k, Roth, regular, 529, etc.  

Rocket J Squirrel

q.lurker said:

You have two "proper" choices:

1. To enter transaction as a ReinvDiv, providing the Dividend $ amount and the number of shares and letting Quicken calculate the price/share, or
2. To enter a DivInc transaction for the dividend $ amount, followed by a Buy Shares amount where you again supply the number of shares and the dividend dollar amount.  

Both ways are equally right and both ways will lead to a valid calculation of Average Annual Return.  The two methods will yield somewhat different values for ROI (Return on Investment) since the ReinvDiv approach does not include the dividend received as shares in the Amount Invested.  

The price per share should never be treated a zero.  

The above comments apply without regard to the type of the account - taxable, retirement, IRA, 401k, Roth, regular, 529, etc.  

All Return statistics are guaranteed to be wrong if you use Div+Buy.

steveogetsatis

q.lurker, that's a helpful explanation.  Thanks.