DRP or Buy?

[Lewylewylewy]

Hi all, just wondering if anyone had some ideas about whether it's better to be in a DRP or get the money from dividends and use it to buy shares?

[macduffy]

Hi all, just wondering if anyone had some ideas about whether it's better to be in a DRP or get the money from dividends and use it to buy shares?

As in most things, it all depends.

If you want more shares in the divvy-paying company then take the DRP - which is often offered at a discount to the current market price.

If you prefer the cash, either for other investments or whatever, then take the cash.

Personally, I have a few DRP's but generally have an alternative use for the cash.

[fungus pudding]

As in most things, it all depends.

If you want more shares in the divvy-paying company then take the DRP - which is often offered at a discount to the current market price.

If you prefer the cash, either for other investments or whatever, then take the cash.

Personally, I have a few DRP's but generally have an alternative use for the cash.

Yeah. That's about it. It's a good way to buy more shares in the company if you want them. The price could be favourable, but if you watch the ups and downs you might do just as well. I don't bother with them.

[Lewylewylewy]

I was thinking that there might be some tax implications of one vs the other?

[winner69]

I was thinking that there might be some tax implications of one vs the other?

No tax implications - (but if you take DRP you still to declare the income etc)

[Harvey Specter]

I was thinking that there might be some tax implications of one vs the other?
The dividend is still taxable, and the net cash is used to buy more. Their use to be a legal tx dodge that some companies used but it has closed.

If there is a discount, it can be worthwhile as there is no borkerage. You can have unallocated funds so if you have a small holding on a high priced share, you might lose a bit on the conversion. eg. a $20 net dividend on a $7 share will only give you 2 more shares at an average cost of $10! I think the $6 unused carries over but you get the point.

[iceman]

I think it is a great way to grow a small holding or portfolio. I have done it for my children in several good dividend paying companies and after several years the compounding growth really is making a difference. Of course, like others above have said, it all depends on whether you like the company and whether you need the cash. But for small allocations the lack of fees makes it a great way to steadily grow your investment.

[smpl]

save transaction costs.