What is a DRP?

The share market is full of jargon which may not be familiar to the new investor. A term which is used frequently is DRP. This acronym means “Dividend Reinvestment Plan”. In this article we discuss the reasons why investors may want to take it up, and the potential downsides. Definition of dividend reinvestment plan Companies can pay their dividends to entitled stock holders through stock as opposed to cash. Some companies may offer DRP shares at a discount to market …

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The top 10 things you need to know about dividends

The world of dividends can become confusing for the investor if they are not familiar with the all jargon. These are the top 10 questions commonly asked about dividends. Why do companies pay dividends? Companies decide to pay dividends to investors out of their excess earnings as a way to reward them. Companies need to be making money to be able to pay dividends. So generally speaking, firms that can pay dividends are in a financial stable position. Are dividends …

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Investing for income? You are doing it all wrong

Many share investors are looking for yield. They need dividends to live off. However, many income investors are left frustrated by their share portfolios. Why? Because most investors looking for dividends go straight to the same sorts of stocks, Banks, Telstra, Wesfarmers, etc. Whilst they pay a great yield today, nothing much changes over time. However if you are in it for the long term, there are other ways to generate dividends in the future. Growth shares have typically been …

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