DRiP Performance Tracking

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madbadger2000
Posts: 3
Joined: Wed Aug 08, 2018 2:01 pm

DRiP Performance Tracking

Post by madbadger2000 » Wed Aug 08, 2018 3:45 pm

I track the performance of an investment club's portfolio. The non-DRiP stocks are simple to report gain/loss. However, I find the DRiP stocks more difficult. Let me try to explain:

Do I account each dividend received as part of the principle investment? For example, say we take in $1,000 in dues and purchase DRiP Stock A. DRiP Stock A has a 4% DRiP for $40. Does our principle investment now change to $1,040, or remain at the the original $1,000? I can see these two ways. On one hand, we spent $40 to purchase more Stock A. On the other hand, we never took in dues for that $40 Stock A repurchase, so it's not traceable to an individual's dues/investment.

I currently track DRiPs as additional performance of a stock. So the $40 dollars from above is treated as a gain/loss, but categorized as a dividend gain/loss (not just price adjustment gain/loss like non-DRiP stocks).

I am not sure if this tracking is merely preferential or there is a standard for DRiP accounting. Or, if I am correct at all. Any insight on this?

Attached is a condensed version on my tracking mechanism for further examination, if needed.
https://docs.google.com/spreadsheets/d/ ... sp=sharing

Thanks!

NOTE: THIS IS NOT A QUESTION ON ACCOUNTING FOR TAXES, BUT RATHER A QUESTION ON ACCOUNTING FOR INVESTMENT PERFORMANCE. FOR TAX PURPOSES, THE ONLINE BROKERAGE TABULATES ALL DRiPS. MEMBERS ARE TAXED BASED ON THEIR % OWNERSHIP OF THE PORTFOLIO AND REPORTED ON THEIR INDIVIDUAL SCHEDULE K-1.

Walkure
Posts: 58
Joined: Tue Apr 11, 2017 9:59 pm

Re: DRiP Performance Tracking

Post by Walkure » Wed Aug 08, 2018 5:00 pm

FWIW, Vanguard includes reinvested dividends in the "total cost" basis for my holdings. I personally find this very annoying and end up subtracting it out mentally when comparing performance between investments that throw off different yields.

madbadger2000
Posts: 3
Joined: Wed Aug 08, 2018 2:01 pm

Re: DRiP Performance Tracking

Post by madbadger2000 » Thu Aug 09, 2018 8:53 am

Thanks for the reply. So to be clear, you manually remove dividends from your cost basis because you consider dividend earnings an investment gain rather than part of the principle investment?

TDAMeritrade, like Vanguard, also includes reinvested dividends in the "total cost" basis for holdings. This information leads me to believe that brokerages merely provide clients with a basic summary of transactions rather than enhanced portfolio performance metrics.

It is understandable that brokerages don't provide enhanced metrics because a) most people don't care and demand is low, b) ROI of providing this service is low-to-nonexistent, and c) additional liability.

MotoTrojan
Posts: 2611
Joined: Wed Feb 01, 2017 8:39 pm

Re: DRiP Performance Tracking

Post by MotoTrojan » Thu Aug 09, 2018 9:00 am

Huh? Vanguard performance metrics show price gain as well as income (dividends) returns.

viz
Posts: 146
Joined: Fri May 04, 2018 11:22 pm

Re: DRiP Performance Tracking

Post by viz » Thu Aug 09, 2018 9:27 am

madbadger2000 wrote:
Wed Aug 08, 2018 3:45 pm
I track the performance of an investment club's portfolio. The non-DRiP stocks are simple to report gain/loss. However, I find the DRiP stocks more difficult. Let me try to explain:

Do I account each dividend received as part of the principle investment? For example, say we take in $1,000 in dues and purchase DRiP Stock A. DRiP Stock A has a 4% DRiP for $40. Does our principle investment now change to $1,040, or remain at the the original $1,000? I can see these two ways. On one hand, we spent $40 to purchase more Stock A. On the other hand, we never took in dues for that $40 Stock A repurchase, so it's not traceable to an individual's dues/investment.

I currently track DRiPs as additional performance of a stock. So the $40 dollars from above is treated as a gain/loss, but categorized as a dividend gain/loss (not just price adjustment gain/loss like non-DRiP stocks).

I am not sure if this tracking is merely preferential or there is a standard for DRiP accounting. Or, if I am correct at all. Any insight on this?

Attached is a condensed version on my tracking mechanism for further examination, if needed.
https://docs.google.com/spreadsheets/d/ ... sp=sharing

Thanks!

NOTE: THIS IS NOT A QUESTION ON ACCOUNTING FOR TAXES, BUT RATHER A QUESTION ON ACCOUNTING FOR INVESTMENT PERFORMANCE. FOR TAX PURPOSES, THE ONLINE BROKERAGE TABULATES ALL DRiPS. MEMBERS ARE TAXED BASED ON THEIR % OWNERSHIP OF THE PORTFOLIO AND REPORTED ON THEIR INDIVIDUAL SCHEDULE K-1.
Given the note, I will calculate returns based on $1000. I think of it like a CD with compounding interest and my return is the (payout - initial deposit). If interest was paid out every year and not compounded then my return would be lower.

livesoft
Posts: 62917
Joined: Thu Mar 01, 2007 8:00 pm

Re: DRiP Performance Tracking

Post by livesoft » Thu Aug 09, 2018 10:36 am

Performance tracking is performance tracking. It doesn't matter if it is a mutual fund, stock, CD, annuity, DRIP or whatever.

I suggest your club use the FREE Microsoft MS Money for Windows. Easily downloaded off the internet and installed. MS Money can track ALL your transcations and give you all kinds of reports. It's FREE! I use it.
Wiki This signature message sponsored by sscritic: Learn to fish.

madbadger2000
Posts: 3
Joined: Wed Aug 08, 2018 2:01 pm

Re: DRiP Performance Tracking

Post by madbadger2000 » Thu Aug 09, 2018 5:58 pm

viz wrote:
Thu Aug 09, 2018 9:27 am
madbadger2000 wrote:
Wed Aug 08, 2018 3:45 pm
I track the performance of an investment club's portfolio. The non-DRiP stocks are simple to report gain/loss. However, I find the DRiP stocks more difficult. Let me try to explain:

Do I account each dividend received as part of the principle investment? For example, say we take in $1,000 in dues and purchase DRiP Stock A. DRiP Stock A has a 4% DRiP for $40. Does our principle investment now change to $1,040, or remain at the the original $1,000? I can see these two ways. On one hand, we spent $40 to purchase more Stock A. On the other hand, we never took in dues for that $40 Stock A repurchase, so it's not traceable to an individual's dues/investment.

I currently track DRiPs as additional performance of a stock. So the $40 dollars from above is treated as a gain/loss, but categorized as a dividend gain/loss (not just price adjustment gain/loss like non-DRiP stocks).

I am not sure if this tracking is merely preferential or there is a standard for DRiP accounting. Or, if I am correct at all. Any insight on this?

Attached is a condensed version on my tracking mechanism for further examination, if needed.
https://docs.google.com/spreadsheets/d/ ... sp=sharing

Thanks!

NOTE: THIS IS NOT A QUESTION ON ACCOUNTING FOR TAXES, BUT RATHER A QUESTION ON ACCOUNTING FOR INVESTMENT PERFORMANCE. FOR TAX PURPOSES, THE ONLINE BROKERAGE TABULATES ALL DRiPS. MEMBERS ARE TAXED BASED ON THEIR % OWNERSHIP OF THE PORTFOLIO AND REPORTED ON THEIR INDIVIDUAL SCHEDULE K-1.
Given the note, I will calculate returns based on $1000. I think of it like a CD with compounding interest and my return is the (payout - initial deposit). If interest was paid out every year and not compounded then my return would be lower.
Thanks viz. This is my approach and I accept your comments as validation.

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