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Thread: DRP Question

  1. #1

    Default DRP Question

    Just regarding Dividend Reinvestment Plans,

    Are the shares bought issued by the company, like a capital raise?
    or bought from the company/ or at the open market?

    and what if you only have enough for example '10.5' shares, does the rest get paid out?

    just didnt quite understand the procedure, and couldnt find any posts on it

  2. #2

    Join Date
    Aug 2008

    Default Re: DRP quesition


    I'm 80% sure that DRP are stocks created by the company.

  3. #3
    Jedi Master white_crane's Avatar
    Join Date
    Aug 2008

    Default Re: DRP quesition

    It is my understanding that the shares under a DRP are 'created', i.e. new shares are issued.

    With regards to the "10.5 shares" example, a number of things can happen, it all depends on the company. Some companies will:

    1. pay out the remainder of any dividends - eg dividend of $25, buy 2 shares @ $10 and $5 will be direct debited to your bank account.

    2. carry over the remainder to the next dividend payout - eg the spare $5 will be added to the next dividend amount you receive.

    3. donate the remainder (if under a certain amount eg $10) to a charity and send you a receipt (for tax deduction purposes).
    I am the chosen one

  4. #4

    Default DRP Question

    Hi All,

    Bit of a n00b question, I've joined the DRP with one of the companies im invested in and was wondering what happens with those additional shares issued to me?

    I trade via Commsec, will they simply pop up on my profile?


  5. #5

    Default Re: DRP Question

    Yes the quantity you gain under the DRP will pop up on your account and you should get a new Chess statement indicating the change in quantity
    I'm free to bore my well-bought friends and spend my cash until the end - Iggy Pop

  6. #6
    The Contrarian Averager So_Cynical's Avatar
    Join Date
    Aug 2007
    Sydney - Muntinlupa

    Default Re: DRP Question

    Suncorp is the only stock i know of that is not issuing new shares for their DRP, has been buying on market for the last 2 years or so.

    In my experience most stocks hold on to any money left over from the issue of DRP stocks and simply add it to the next dividend.
    Statistics: 172 Closed Trades since July 07, Trades: Winners 135 - Losers 37, Expectancy/$1 Risked: $0.78

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