Case Study: Broker speed of dividend payments

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livesoft
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Case Study: Broker speed of dividend payments

Post by livesoft » Wed Dec 28, 2011 9:12 am

We own shares of VSS in three different accounts. VSS pays a dividend. This note is to show how quickly different brokers get you the dividend.

Today is December 28, 2011 and a dividend payment from VSS should appear in all these accounts. I'll keep track of when the dividends appear online.

A. WellsFargo -- appeared before 8 am, I can transfer to checking and withdraw them in about an hour
B. TDAmeritrade -- [edit] appeared at 4:15 pm, after the market closed; ACH'd to checking account and available in checking account the next morning
C. Vanguard -- [edit] appeared the next morning in the money market fund, after the overnight computer run; could be in my checking account 48 hours later than the WellsFargo-paid dividend.

Maybe folks with other brokers can chime in on this thread with their experience? Why might this be useful? Well, maybe you need your dividend to make a year-end charitable contribution or to pay property taxes before 2012 starts. This might be more important if the pay date was 12/31 (or this year 12/30 since 12/31 is a Saturday).

Edit to add: I have another thread about Case Study of trade executions: viewtopic.php?f=10&t=165732
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Re: Case Study: Broker speed of dividend payments

Post by midareff » Wed Dec 28, 2011 9:36 am

I own it at VG and it does not show as of the last close.

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Re: Case Study: Broker speed of dividend payments

Post by nisiprius » Wed Dec 28, 2011 10:54 am

Interesting! "Availability of funds" is a meaningful factor in judging brokerages, yet I don't think I've ever seen it mentioned in articles rating brokerages.

I have a dab of VTI in my Fidelity account. Vanguard shows "Record date 12/23/2011, Ex-Dividend Date 12/21/2011, Payable Date 12/28/2011" so I guess it's due today, too. When I go online, Fidelity shows
Transaction History for the Past 30 Days
As of 12/28/2011, 3:30 AM ET
12/28/2011 DIVIDEND RECEIVED
VTI VANGUARD INDEX FDS VANGUARD TOTAL STK M
Unfortunately, I wasn't logged on in the wee hours so can't confirm that "3:30 AM."

It shows as "cash." It looks as though it has NOT been invested into the money market account, so I have no idea whether it's really available to me, or how quickly I could get it out of Fidelity and spendable somewhere else.

Ah. It's available for investing at Fidelity, though. It shows up as "cash from unsettled activity," and when I press "trade," the "cash available to trade" total equals the amount in the money market fund PLUS the amount paid as a dividend.
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Wed Dec 28, 2011 10:59 am

Thanks nisiprius. The Fidelity report is what I expected. The money was certainly available to buy shares in the pre-market trading this morning.
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Re: Case Study: Broker speed of dividend payments

Post by nisiprius » Wed Dec 28, 2011 11:01 am

So, what's your conclusion? WellsFargo and Fidelity are serious brokerages and TDAmeritrade and Vanguard Brokerage Services are convenience stores?
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Wed Dec 28, 2011 11:09 am

All the results are not in yet. I expect TDAmeritrade to update my account while the market is still open today. I do not expect Vanguard to do until overnight. I hope others will report about other brokerages.

I also expect some financial journalists to be lurking and have this criteria appear in a future "broker ratings" article. :)
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Re: Case Study: Broker speed of dividend payments

Post by dbr » Wed Dec 28, 2011 11:24 am

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Re: Case Study: Broker speed of dividend payments

Post by sscritic » Wed Dec 28, 2011 11:30 am

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Re: Case Study: Broker speed of dividend payments

Post by xerty24 » Wed Dec 28, 2011 2:56 pm

I get margin buying power against my dividends receiveable balance as of the ex date, even though payment may be (much) later depending on the stock ;). Interactive Brokers.
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Wed Dec 28, 2011 4:27 pm

At close of market, neither my TDAmeritrade nor Vanguard account had been updated. I am disappointed in TDAmeritrade because I seem to recall that at a previous instance it had updated early in the morning.

Wait! This just in for TDAmeritrade:
12/28/2011 16:15:49
So updated late in the day after market close.
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Re: Case Study: Broker speed of dividend payments

Post by rohitj » Wed Dec 28, 2011 4:30 pm

Even if its not showing up, you should check to see if they start accuring interest on your behalf from the 28th (assuming you have a setting for keeping available cash in a money market).

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Wed Dec 28, 2011 4:32 pm

Accrue interest? Who are you kidding? :) How much would I need for it to earn at least 1 cent in one day?
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Re: Case Study: Broker speed of dividend payments

Post by rohitj » Wed Dec 28, 2011 4:46 pm

If you are in an MLP, REIT, or other high-dividend paying stock (i.e. VZ etc.,), it could matter. For me its just a matter of principal. These broker could very well be doing it intentionally because in aggregate it could be a sizable amount of money.

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Re: Case Study: Broker speed of dividend payments

Post by Muchtolearn » Wed Dec 28, 2011 5:44 pm

Colleagues:
I have very, very rarely sold a stock (only when I exercise stock options which only have 3 more grants to go thank goodness as the performance has been horrible) and never buy a stock. However, I recall the same thing that happens with any Vanguard transaction. Everything updates overnight and show in the morning. I have never been in a position (and never will be) where I would want to use proceeds arriving that day for investment that day. Vanguard would not be the place for that but that is fine with me and I know fine with them. So I am looking forward to the reports that it showed up tonight in your account ..

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Thu Dec 29, 2011 8:05 am

The VSS dividend at Vanguard now appears in the money market fund a day later.
The TDAmeritrade dividend appeared soon enough to submit an ACH-transfer request to send it to my checking account before overnight. This morning the money appears in checking account and is available for withdrawal.

Conclusion: Different brokers make paid dividends available at different times. If you feel you will need to use your dividend immediately, then use Fidelity and Wells Fargo and avoid Vanguard as a broker.

Anybody else want to comment about a different broker? You can also pm me and I will summarize here if you wish to remain mostly anonymous.
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Re: Case Study: Broker speed of dividend payments

Post by sscritic » Thu Dec 29, 2011 8:57 am

livesoft wrote:The VSS dividend at Vanguard now appears in the money market fund a day later.

Just a guess, but there are two Vanguards. The first Vanguard actually made the money available to you yesterday. They then sent that money to the other Vanguard. The other Vanguard used your money from the first Vanguard to purchase shares of a mutual fund. The shares were purchased at the NAV as of the close yesterday. They showed up on the website this morning, just like any other fund purchase.

If you wire funds to Vanguard, they don't show up on the web until the next morning. But can you spend what you don't have? Could you have placed an exchange order yesterday against the funds that had been received but not yet posted on the web? Here is another experiment for livesoft. Get your money fund down close to zero (I think you do this anyway). Since you get same day service with ACH, ACH $1000 to your money fund at 10:00. Just before the close, enter an exchange to Star for $1000. What happens? My guess is that the system will not let you do it. So then, try again by phone; since the money is in Vanguard, they should let you use it for an exchange. Enquiring minds want to know.

Note that Vanguard would have had no problem with a straight to Star ACH, so the question is how do they handle a same day ACH to money fund exchange to Star? Is there any reason it should be different since the net result is exactly the same: ACH out of your bank account, new shares of Star at Vanguard.

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Fri Dec 30, 2011 8:59 am

Today, another dividend was paid in the TDAmeritrade account. This time it was for VBR and it shows up before the market opens which is more in line with my expectation for this account:
12/30/2011 05:29:53 ORDINARY DIVIDEND
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Re: Case Study: Broker speed of dividend payments

Post by nisiprius » Fri Dec 30, 2011 4:11 pm

livesoft wrote:Today, another dividend was paid in the TDAmeritrade account. This time it was for VBR and it shows up before the market opens which is more in line with my expectation for this account:
12/30/2011 05:29:53 ORDINARY DIVIDEND
OK. Livesoft... why should it be different for the two ETF's? I guess we'd better start keeping records calculating the mean and standard deviations of the lag times... :)
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Fri Dec 30, 2011 4:24 pm

I'm thinking that someone overslept at TDAm or forgot to push the button the other day.
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Re: Case Study: Broker speed of dividend payments

Post by jpsfranks » Fri Dec 30, 2011 5:00 pm

livesoft wrote:A. WellsFargo -- appeared before 8 am, I can transfer to checking and withdraw them in about an hour
B. TDAmeritrade -- [edit] appeared at 4:15 pm, after the market closed; ACH'd to checking account and available in checking account the next morning
C. Vanguard -- [edit] appeared the next morning in the money market fund, after the overnight computer run; could be in my checking account 48 hours later than the WellsFargo-paid dividend.

I assume your checking account is at Wells Fargo which enabled the instant transfer. If it wasn't then presumably you'd have to ACH it out as well and it probably wouldn't be available until at least the next day, as with your TDAmeritrade experience.

It's fair to compare brokerage accounts on how fast dividend payments are made available for re-investment (looks like Wells Fargo still comes out on top), but when comparing them on how fast the money can be pushed to a checking account, it's only really a fair comparison if that checking account is with a third party.

Or, I guess a lesson is if you want immediate access to a dividend then bank with your broker.

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Fri Dec 30, 2011 5:05 pm

I gave reasons in the OP why one would want to get the money into checking quickly. Nevertheless, if one ignores checking, the VSS dividends were available the same day for re-investing at WF, a day later at TDAm (cannot re-invest the same day after the market closes), and 2 days later at Vanguard.
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Re: Case Study: Broker speed of dividend payments

Post by grabiner » Fri Dec 30, 2011 7:06 pm

And as another example: As of 7:00 PM on 12/30, the 12/29 dividend distribution on EWX has appeared in my brokerage account, but the capital gain distribution which should have been made the same day has not, and I can't find any record on the Vanguard web site of what distribution to expect. (I know the correct amount because I have checked SPDRs web site.)
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Re: Case Study: Broker speed of dividend payments

Post by grabiner » Sat Dec 31, 2011 3:59 pm

grabiner wrote:And as another example: As of 7:00 PM on 12/30, the 12/29 dividend distribution on EWX has appeared in my brokerage account, but the capital gain distribution which should have been made the same day has not, and I can't find any record on the Vanguard web site of what distribution to expect. (I know the correct amount because I have checked SPDRs web site.)


Update: As of 12/31, the capital gain distribution appears as a net credit on my brokerage account, but has not swept to my money-market account; presumably, it will sweep on 1/3. Thus this transaction actually settled a day late, and I still cannot transfer the 12/29 payment from my money-market account.
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Sat Dec 31, 2011 4:25 pm

Separate from the ETF distributions in a VBS account, we have a joint taxable account at Vanguard with an equity in it. We have distributions paid to our checking account.

The distribution listed by Vanguard as a 12/22 transaction, 12/22 reinvest date and payable date 12/23 (Friday) appeared in checking on morning of 12/27 (next business) day which is not too shabby. Basically an extra day for ACH to checking.
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Re: Case Study: Broker speed of dividend payments

Post by grabiner » Tue Feb 21, 2012 10:32 pm

grabiner wrote:
grabiner wrote:And as another example: As of 7:00 PM on 12/30, the 12/29 dividend distribution on EWX has appeared in my brokerage account, but the capital gain distribution which should have been made the same day has not, and I can't find any record on the Vanguard web site of what distribution to expect. (I know the correct amount because I have checked SPDRs web site.)


Update: As of 12/31, the capital gain distribution appears as a net credit on my brokerage account, but has not swept to my money-market account; presumably, it will sweep on 1/3. Thus this transaction actually settled a day late, and I still cannot transfer the 12/29 payment from my money-market account.


Further update: The capital gain was actually paid out a day late; this wasn't Vanguard's fault. EWX paid out its dividend to everyone on 12/29, and its capital gain on 12/30.
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Mon Sep 30, 2013 4:54 pm

For future reference, today's related post on What price did your broker give you on your dividend reinvestment?
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Sat Jun 28, 2014 12:02 pm

This is an old thread, but I wanted to report on ETF dividends that are payable on Monday June 30th. For instance, VSS has a payout.

Two brokers that I have already hint at the payout. First WellsTrade has this with the correct dollar amounts (whited out):
Image
WT is really excellent at showing pending transactions.

Next, TDAmeritrade does not show the transaction yet in the account history, but the dividend cash is already showing up in the Cash Sweep account balance total.

Can anybody report what Schwab, FIdelity or any other brokers have done in this regard?
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Re: Case Study: Broker speed of dividend payments

Post by pshonore » Sat Jun 28, 2014 12:09 pm

Dividends have shown up for VWO, VNQ and VTI at Fido; all with $ and number of shares resulting from reinvestment.

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Sat Jun 28, 2014 12:18 pm

That's really outstanding for Fidelity. Thanks!
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Re: Case Study: Broker speed of dividend payments

Post by placeholder » Sun Jun 29, 2014 10:30 am

livesoft wrote:Next, TDAmeritrade does not show the transaction yet in the account history, but the dividend cash is already showing up in the Cash Sweep account balance total.

Similar at Scottrade where dividend money has appeared (I have VWO, VGK, VSS, VPL there all which have the same dividend schedule) but no transactions are showing yet.

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Re: Case Study: Broker speed of dividend payments

Post by stlutz » Sun Jun 29, 2014 12:55 pm

As with the other poster, Fido currently shows the 6/30 payments for VPL, IJS, and US T-Notes on this history tab. The amounts are also included in my "cash available to trade" amount.

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Re: Case Study: Broker speed of dividend payments

Post by Karamatsu » Mon Jun 30, 2014 12:08 am

No mention of anything at Schwab yet. Well, I should say, nothing in the History information. I'm not sure what the cash balance was yesterday so no way to check if any funds have been deposited.

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Re: Case Study: Broker speed of dividend payments

Post by Karamatsu » Mon Jun 30, 2014 7:21 pm

Surprisingly, the Schwab "account history" page still does not list VSS dividends received, though I can now confirm that the cash balance in the account was increased since the weekend, presumably reflecting those dividends, but I'm not sure when that update occurred.

It will be interesting to see just when they do update the history information.

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Re: Case Study: Broker speed of dividend payments

Post by in_reality » Tue Jul 01, 2014 2:56 am

Schwab:

Case A:
Mutual Fund - FMIEX
Dividend not reinvested
Payment Date: 6/30/14
Dividend is showing showing as available [To Trade and To Withdraw] cash on 7/1 (4am). Not sure when it arrived. I think it was sometime after the market closed but I didn't check.

Case B:
ETF - SLYV
Dividend Reinvested
Payment Date: 30-Jun-2014
Dividend is showing showing as PENDING cash on 7/1 (4am).

Case C:
ETF - SCHM
Dividend Reinvested
Payment Date: 06/27/2014
Dividend appeared as PENDING cash on 6/27 then reinvested on 6/30. (which was the next open day)

Case D:
Mutual Fund - VTIAX
Dividend Reinvested
Payment Date: 06/23/2014
Dividend Reinvested on 06/23/2014


----------------------------------
So it seems like:

$$$ is available the next day.
Mutual Funds are reinvest the same day
ETFs are reinvested the next day. (When should it be done?)
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Tue Jul 01, 2014 6:04 am

in_reality wrote:----------------------------------
So it seems like:

$$$ is available the next day.
Mutual Funds are reinvest the same day
ETFs are reinvested the next day. (When should it be done?)

Reinvestment of dividends from ETFs is a broker function and it seems different brokers do it different ways.

Fidelity: We have learned that Fidelity knows the amount of dividends that will be used to buy more shares and buys those shares on the pay out ex-dividend date. Fidelity seems to be the fastest in reinvesting dividends of ETFs.

TDAmeritrade buys more shares the day after the payout date. For instance, in one of our TDAm accounts, the dividend is reinvested and so far there is no record that anything has happened. I expect later today that the history will reflect the reinvestment and price paid. This account appears to be like Karamatsu's experience with Schwab so far, so I would like to know if K is having dividends reinvested.

However, in another TDAm account, the dividend is not reinvested (see my June 28 post) and I have already ACH'd it into checking where it sits this morning.

For a Vanguard mutual fund VLCAX, I see that reinvest date was 6/23 and payable date was 6/24. I have the dividend go directly to my checking account where it appeared on the morning of 6/25.
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Re: Case Study: Broker speed of dividend payments

Post by Karamatsu » Tue Jul 01, 2014 8:00 am

Yep, all of the Vanguard ETF dividends (VTI, VEA, VWO, VSS) appear on the history page now. I'm not sure when that happened because I was away all day, and time zone differences make it even less clear. I don't have dividend reinvestment enabled for these so I can't guess what price they would have given me, but my recollection matches what InReality said, with reinvested shares appearing the next trading day.

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Re: Case Study: Broker speed of dividend payments

Post by pshonore » Tue Jul 01, 2014 6:16 pm

I once asked Fido how they determined the "reinvest" price. Here's what the big Dog said:

Dividend reinvestments are priced at the average price that the security is purchased by Fidelity. This process typically results in a different reinvestment price than the price that the security is currently trading.

Fidelity pre-identifies all customers that will be reinvesting their dividend and goes to the market to purchase shares three days prior to the payable date. We purchase as many shares as possible on a best-efforts basis, determine the average share price, and reallocate these shares proportionately to the customers that are reinvesting their dividend.

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Tue Jul 01, 2014 6:20 pm

Yes, 3-days prior is really the ex-dividend date, so I mis-wrote and have changed my post.

TDAmeritrade reinvested VSS late today:
Image
I wish they were more transparent about it. I just feel I didn't get a good price. :annoyed
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Re: Case Study: Broker speed of dividend payments

Post by LadyGeek » Tue Jul 01, 2014 6:38 pm

This thread is now in the Investing - Theory, News & General forum (dividend payments).
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Re: Case Study: Broker speed of dividend payments

Post by pshonore » Tue Jul 01, 2014 6:45 pm

livesoft wrote:Yes, 3-days prior is really the ex-dividend date, so I mis-wrote and have changed my post.

TDAmeritrade reinvested VSS late today:
Image
I wish they were more transparent about it. I just feel I didn't get a good price. :annoyed

Think we're getting confused here; for stocks and ETFs; ex div is 3 days prior to record date but has no relation to date payable which can vary widely

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Tue Jul 01, 2014 6:48 pm

pshonore wrote:Think we're getting confused here; for stocks and ETFs; ex div is 3 days prior to record date but has no relation to date payable which can vary widely

OK, but there is no way Fidelity purchases shares before the ex-div date.
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Re: Case Study: Broker speed of dividend payments

Post by pshonore » Tue Jul 01, 2014 7:12 pm

Agreed, otherwise they would not know how many shares they owned beneficially (meaning you and I) and how much dividend they were being paid.

As an example, ex-div date for VNQ was 6/24 pay date was 6/30

Also received a dividend for WMB (not an ETF); ex div date was 6/11 pay date was 6/30

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Mon Dec 29, 2014 8:45 pm

Today was dividend payout day and I am disappointed in Fidelity. As early as Friday night FIdelity reported a transaction of "Dividend received" in the History tab, but today no updating has occurred for "Cash available to trade" which still sits at $0.00. It is as if I am blocked from getting my hands on the money or even using it. This observation is inconsistent with the earlier observation of stlutz and pshonore.

At TDAmeritrade, an order to ACH transfer the money to my checking account was accepted yesterday. WellsTrade is a simple near real-time transfer of the dividend to checking.

If I needed a dividend payment at year-end to pay my property taxes or a college tuition bill, then I cannot count on Fidelity. I cannot even transfer the dividend at Fidelity to my Fidelity Cash Management account because it appears to be stuck in Limbo. (I wonder if dividends are set to be reinvested for the security accidentally. Checked, nope.) Fidelity says another overnight computer run is needed to clear the dividend for use. It seems they earn at least a day of interest that I don't get.
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Re: Case Study: Broker speed of dividend payments

Post by stlutz » Mon Dec 29, 2014 9:42 pm

Hmmm... the VXUS dividend that went pay today is listed as "pending activity", but if I go under "Manage Cash", it is included in the amount that is avaiable for withdrawal.

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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Mon Dec 29, 2014 9:58 pm

Maybe they batch the updating of accounts and your account is ahead of mine? Would they use account number, SSN, or last name? Also my account is a margin account, so perhaps that's a difference as well?
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Re: Case Study: Broker speed of dividend payments

Post by stlutz » Mon Dec 29, 2014 10:00 pm

I have a cash account.

pshonore
Posts: 5610
Joined: Sun Jun 28, 2009 2:21 pm

Re: Case Study: Broker speed of dividend payments

Post by pshonore » Mon Dec 29, 2014 10:00 pm

My dividends for VG ETFs (VB,VEU,VNQ, etc.) all showed up at Fido yesterday (Sunday) as of 3:30 am. They are all reinvested with # of shares listed etc. and I think are reflected in my account value as well.

OutInThirteen
Posts: 381
Joined: Thu Mar 14, 2013 2:11 pm

Re: Case Study: Broker speed of dividend payments

Post by OutInThirteen » Tue Dec 30, 2014 12:22 am

12/29 dividends in my Fidelity TIRA (VXUS) and Roth IRA (VTI,VBR, VNQ, VSS, and VXUS) all showed up as cash available to trade sometime during the day Sunday.

livesoft
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Re: Case Study: Broker speed of dividend payments

Post by livesoft » Tue Dec 30, 2014 7:04 am

Thanks everybody for the additional comments. My Fidelity account has some extra entries today about account types:
12/30/2014 JOURNALED JNL VS A/C TYPES
so it appears that the dividend moved from "margin" to "cash". Maybe it is the margin account type that is an issue? I will change my account type from margin to cash to see if it makes a difference next time.
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oldzey
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Re: Case Study: Broker speed of dividend payments

Post by oldzey » Tue Dec 30, 2014 11:13 am

In my Vanguard account, VTI dividends (payable 12/29/2014) were swept to VMMXX this morning, available to trade.

I was curious about the speed of payment so I actually was watching late last night.

I noticed the money went into VMMXX around 1:30 a.m. Central Time (Chicago) with no information about the transaction, at which point I hit the sack. The transaction information (-VTI, +VMMXX) showed up this morning.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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