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 …
As tax time is quickly approaching, below are some tax topics that may not be obvious to share investors/trader. Do I pay tax if I inherited shares? You only need to pay capital gains tax on shares if the inherited shares have been sold. If the deceased brought the shares before 20 September 1985 then the cost base is the market value of the asset on the day the person died. If the deceased brought the shares after 20 September …
Companies may decide to pay a portion of their earnings back to shareholders in the form a dividend. This dividend can be paid out in cash or shares. The payment of shares is known as a dividend reinvestment plan (DRP). It is not compulsory for companies to pay out dividends as they may decide to keep the funds within the company as retained earnings. As an investor you may be given a choice to take up your dividend as a …
Read MoreAdvantages and Disadvantages of a Dividend Reinvestment Plan (DRP)