OCBC (SGX: O39) Scrip Dividend at S$7.81 per Share Looks Attractive: Here's a Step-By-Step Guide to Applying for It
OCBC declared an interim dividend of S$0.159 per share for its 2020 second-quarter, and investors can choose to receive it in cash or via scrip (in the form of shares).
Right here, let’s look at what investors should know about the latest OCBC scrip dividend scheme.
TL;DR: Details About OCBC Scrip Dividend Scheme for the 2020 Second-Quarter
Here are some highlights of what’s covered:
- OCBC is allowing investors to receive the 2020 second-quarter interim dividend in the form of shares
- Each new share will be issued at S$7.81, a 10% discount to the average of the volume-weighted average prices of OCBC shares on 21 August 2020 and 24 August 2020
- At the time of writing, OCBC shares are selling at S$8.66 apiece
- Investors have up till 22 September 2020, which is the last day for shareholders to submit their forms, to decide whether to accept their dividend in the form of cash or shares
- They can do so via the green form sent by CDP or through the SGX Investor Portal
OCBC Scrip Dividend Scheme Details
Scrip Share Price
In its 2020 second-quarter earnings release on 7 August, OCBC revealed that it’s declaring an interim dividend of S$0.159 per share and the scrip dividend scheme will be applicable.
This is in line with the MAS guidance for local banks to moderate their dividends for 2020 and for scrip dividend to be made available.
On 25 August, OCBC announced that the price at which each new share will be issued is S$7.81.
The issue price is based on a 10% discount to the average of the volume-weighted average prices of OCBC shares on 21 August 2020 and 24 August 2020, which was S$8.67.
Shareholders who held onto OCBC shares as of 24 August (record date) 5pm would be entitled to the dividend.
Timeline for OCBC Scrip Dividend Scheme
The following is the timeline for the latest OCBC scrip dividend scheme:
|On or about 3 September 2020 (Thursday)||Notices of Election and Scrip Dividend Entitlement Advices will be dispatched to eligible shareholders|
|22 September 2020 (Tuesday)||Last day for shareholders to submit the Notices of Election and Notices of Cancellation|
|On or about 7 October 2020 (Wednesday)||Dividend payment date (in cash or in shares)|
|On or about 8 October 2020 (Thursday)||New shares to be listed on the Singapore stock exchange and credited to shareholders|
The Notices of Election and Scrip Dividend Entitlement Advices will contain the information on how to go about applying for the scrip dividend.
There’s a step-by-step guide on how shareholders can go about applying for the scrip dividends at the bottom!
How Many New Shares Will OCBC Shareholders Get?
Let’s say you own 1,000 shares of OCBC.
You are entitled to a dividend of S$159 since the declared interim dividend is S$0.159 per share.
Since the scrip share price is S$7.81, you have the option to get 20.36 new shares in OCBC.
The math behind this is:
New shares entitled = (S$0.159 x number of shares owned) / S$7.81
OCBC said that fractional entitlements to a share will be rounded up to the nearest whole share.
Therefore, for the above example, the fraction would be rounded up to 21 new OCBC shares.
Trading of Odd Lots
Since the number of shares received is below the standard board lot of 100 (also known as “odd lots”), they cannot be easily traded on the Singapore stock market.
If you would like to sell off your odd lots, you can contact your broker to do so.
Alternatively, shareholders may also contact OCBC Securities.
It will facilitate the trading of odd lots at a reduced brokerage fee of $15 (without GST) per contract for one month from the listing and crediting date (which is on or about 8 October 2020).
OCBC Shareholders Have to Make an Informed Choice
The price of S$7.81 at which each new OCBC share will be issued is extremely inviting.
Looking back at OCBC’s stock price chart, the bank last traded at that share price on 23 March 2020, the lowest point for this year.
In my opinion, unless there’s another black swan event, we are unlikely to hit the bottom seen in March.
If investors choose not to accept the dividends in the form of shares, they would see their shareholdings diluted as there’ll be an increased outstanding share count once the new OCBC shares are listed on the stock exchange.
In any case, shareholders have up till 22 September 2020, which is the last day for investors to submit their forms, to decide on how they wish to receive their dividends.
Step-By-Step Guide to Applying for OCBC Scrip Dividend
If you have not elected for permanent scrip dividend previously, the Notice of Election form sent to your residence will look like this:
The form will show you the number of OCBC shares you have and your entitlement (the cash amount or the number of new shares you will get).
If you wish to receive your dividend in scrip form, you need to declare accordingly and sign the form off. There’s an envelope provided for you to mail it.
(Note: If you wish to receive your dividend in the default cash form, you don’t have to do anything.)
On top of submitting a physical copy of the Notice of Election, if your OCBC shares are held in your CDP account (only for individual and joint alternate-signatory accounts), you can choose to make an electronic submission for the new shares via the SGX Investor Portal.
Once on the SGX Investor Portal, you will see “Corporate Actions Form Submission” around the middle-left of the page.
You can then choose Oversea-Chinese Banking Corporation Limited under “Security Name” and you will be directed to another page.
There, you have to read through the details provided such as what the OCBC scrip dividend entails. Thereafter, you can click on “Proceed” to go to the next page.
You will get to the “Verification” page next where you have to type in your CDP securities account number and the last four characters of your NRIC or passport number.
Once that’s done, you can proceed to the subsequent page where you will be asked to select your election option.
The last step will be to review the details before submission. There’s also a declaration you need to do at the bottom of the page.
Once you click on “Submit”, you will see the message: “Your form is submitted successfully”.
Now you just have to wait for the new OCBC shares to be deposited to your CDP account! The expected payment date is 7 October 2020.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer owns shares in OCBC.