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I will pay for the following article Dividend Reinvestment Plan. The work is to be 8 pages with three to five sources, with in-text citations and a reference page.
I will pay for the following article Dividend Reinvestment Plan. The work is to be 8 pages with three to five sources, with in-text citations and a reference page. Most corporations allow a shareholder to purchase shares commission-free or at a substantial discount to the prevailing share price in the market. Most corporations do not allow reinvestments lower than $10. Through DRIP, the shareholder can accumulate more shares without paying the commission to the broker (Collins, 2010).
At this point in time, over 1000 companies are offering DRIPs. The reason is simple, this plan allows people to purchase more of the company’s stocks because dividends are reinvested into the company knowing that more of the shares will be bought and will likely be held for a longer tenure. When a shareholder registers for the Dividend Reinvestment Plan, he no longer receives the amount of dividend deposited directly into his brokerage account or delivered through the mail. Instead of that, that amount is used to buy an additional number of shares of the corporation. This approach is in favor of investors because one can enjoy the comfort of investing by spending just a little amount and having no commissions to pay and therefore, the investor will be having the best and biggest stocks, which the market has to propose (Collins, 2010).
When the markets are performing well, investors do not seem to purchase enough shares to appease their appetites. This statement seems logical but there is another fact that stock markets are the most reliable and stable investment option as far as long term investment is concerned. Companies desire the option of DRIP for it allows them easy access to capital at a lower rate of interest (Motley Fool, n.d).
Some companies charge nominal fees to allow investors to buy additional stocks through DRIPs while others charge no fees at all. These types of stock purchase provisions are called an Optional Cash Purchase (OCP) or Stock Purchase Plans (SPP). They require an investor to send fees ranging from $10 to $50 at the time of buying additional shares.
DRIPs force shareholders to either .purchase stocks on a consistent basis or hold on to that share. Consequently, shareholders embrace a long-term approach to investing and frequently invest small amounts of money consistently. .
