Why I Stopped My Dividend Reinvestment Plan

You may also like...

7 Responses

  1. Hey Tom, nice article (and thanks for the reference). We recently de-activated a number of our DRPs too. We feel that no matter how many companies we buy, there’s only going to be a certain number of them that are our favourites. We will DRP these, but all the rest we will take cash.

    We will always want to buy more shares. When you DRP, you aren’t necessarily buying (re-investing) at the right time or the right price. Maybe you feel you’ve already got enough of that company’s shares. At least when we make the investment ourselves, we are buying at a price we think is good value. So the dividends can boost this investment from $2k to $2.1K for example.

    Tristan

  2. DRP is not a practice I use as such. 95pct of the assets that I own do not pay out dividends. It our funds that keep all the dividends they receive internal and they reinvest this themselves. It does not get me more assets, The assets I own are suddenly worth more. And it has some nice final advantages in Belgium.

    I have A few stock that pay dividend. I do not drip on purpose. they are part of my options portfolio, and I need multiples of 100. So, getting suddenly 101 shares means I need to find a solution for the 1 lonely share….

  3. Jef says:

    I don’t use a DRIP or DRP as you’ve called it here, although it is something that I’m considering using in future..
    As you mention there’s pros and cons for both and it’s really a personal decision eh? 🙂

  4. Thanks for sharing, appreciate the control element and that you should make an active decision about your portfolio allocation. And with new information since you bought the shares originally, you may actually not want to invest more in that share.

    • tom says:

      Ironically there is only 1 company where I was actively against buying more shares, and that company happened not to have a DRP. But yes, as companies change (new directions, CEO’s, profitability etc) it will be good to be able to evaluate them again on their new footings and make a decision with an equal playing fiend.

      THe one downside to stopping the DRP’s has been the amount of paper mail it created. I literally came home one day to find the mailbox full of letters! (even though I am sure I choose electronic communication for everything I can).

      • Yes you can change it to electronic. Log on to Computershare and Link (and any other company secretary your companies use) and there is an easy function on both websites to change to electronic. Hope that helps 🙂

        Tristan

        • tom says:

          Yeah – I thought I had done that, but I must have missed a few and there were also some “new purchases”. I guess they all just came on the same day and made it look worse than it was/is. Electronic is also so much easier to search (just make sure its backed up if you care about it).

Don't agree with me? Tell me why. I'm always happy for a debate... and the comments are moderated ;)