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Dividend Reinvestment Plans (DRIP)

What is a Dividend Reinvestment Plan/Program (DRIP)? A dividend reinvestment plan (“DRIP”) is where a dividend paying company allows shareholders to opt for receiving in-kind dividends instead of cash (receiving dividends in the form of additional shares). For DRIPs that are administered out of treasury shares (the company issues new stock instead

Dividend Policy and Return of Capital

Corporations often ask investment bankers - "What should we do with our dividend?" Theoretically, dividend policy does not change the value of the firm – implementing a dividend or adding to a dividend should not change the share price1. However outside of academia, it does for reasons including: Tax on Dividends versus