What Are DRP Rounding Methods?
When dividends are reinvested through a Dividend Reinvestment Plan (DRP), the dividend amount rarely equates exactly to whole shares. To handle this, share registries and brokers apply a specific rounding method.
In Navexa, selecting the correct rounding method ensures accurate portfolio tracking and reporting.
Here’s how each method works, with calculation examples for clarity:
1. Round Down
Dividends purchase shares rounded down to the nearest whole number.
Any remaining dividend balance is discarded.
See Example:
See Example:
Dividend received: $100
Share price: $27
Calculation: $100 ÷ $27 = 3.7 shares → rounded down to 3 shares
Shares received: 3 shares (worth $81)
Remaining balance: $19 discarded
2. Round Up
Dividends purchase shares rounded up to the nearest whole number.
Typically, this method requires covering the shortfall with additional funds or arrangements set by the share registry or broker.
See Example:
See Example:
Dividend received: $100
Share price: $27
Calculation: $100 ÷ $27 = 3.7 shares → rounded up to 4 shares
Shares received: 4 shares (worth $108)
Additional funds required: $8
3. Round to Nearest
Dividends purchase shares rounded to the nearest whole number (up or down).
See Example (Round Up):
See Example (Round Up):
Dividend received: $100
Share price: $27
Calculation: $100 ÷ $27 = 3.7 shares → rounded up to 4 shares
See Example (Round Down):
See Example (Round Down):
Dividend received: $100
Share price: $30
Calculation: $100 ÷ $30 = 3.3 shares → rounded down to 3 shares
4. Round Down with Balance Tracking
Dividends purchase shares rounded down to the nearest whole number.
Remaining dividend balances carry forward, combining with future dividends.
See Example:
See Example:
Dividend received: $100
Share price: $27
Calculation: $100 ÷ $27 = 3.7 shares → rounded down to 3 shares
Shares received: 3 shares (worth $81)
Remaining balance of $19 carried forward to next DRP reinvestment.
Important Notes
DRP rounding methods are determined by your company or ETF provider, and implemented by your share registry (e.g., Computershare, Link Market Services) or broker.
Always confirm your DRP method via your registry or broker's documentation to ensure accurate tracking.
Selecting the incorrect rounding method in Navexa may cause small discrepancies in your recorded holdings, affecting dividends and investment reporting accuracy.
Regularly verify and update your Navexa DRP settings to maintain accuracy.