Originally Posted by
Fiordland Moose
If you elect to take the DRIP - you aren't diluted, and maintaining or slightly increase their proportionate shareholding in the company. If a shareholder decides they prefer cold hard cash to do with what they wish, then they become ever so slightly diluted. BUT - that cash gets reinvested into the company, increasing its cash base and able to generate a return on that investment. DRIP's are very common, and offered by some of the most blue chip listed companies in NZ. Not a biggie I like the cash dividends. But it's a great savings vehicle (excuse the pun). How many times have you as a shareholder thought "hmm I might not reinvest that dividend as the SP is a tad high" only to see it keep going, or even worse, spend it and not reinvest it in anything worthwhile. DRIP's are common, understood and trackable by trackers like sharesight, lower brokerage cost, allow the company to reinvest cash into the business, and not compulsory. It's a nice way to raise small amounts of new capital, particularly those that have finance books or working capital requirements.
Just musings.