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Dividend Reinvestment Plans, IBM and Exxon Mobil

Dividend reinvestment plans or DRIPs are a means for shareholders to reinvest their dividends back into a company.   Typically DRIPs require shareholders to own at least one share of stock to participate, requiring a minimal investment on the shareholders part.   DRIPs charge little or no fees to reinvest and if DRPs are set up via IRA plans the dividends earned are tax free (Investing Through Drips, 2011).   Additionally, many companies allow shareholders to purchase additional stocks through their DRIPs at a discount to the current market price (Investing Through Drips, 2011).   These discounts usually range anywhere from one to ten percent.   DRIPs provide investors with the ability to invest for the future without even thinking about doing so (Carlson, 2011).
IBM offers stockholders a dividend reinvestment plan that is managed through computershare.com, which is a popular method for managing investor activity.   Via this service, shareholders with a minimum of one share of IBM’s stock can purchase additional shares of stock, set up reoccurring purchases and set up their dividend reinvestment plan.   The initial setup fee for shareholders taking advantage of IBM’s DRIP is $15.00 and each dividend reinvestment is charged a 2% transaction fee charged on the amount reinvested, up to a maximum of $3.00   (Investor Centre - IBM, 2011).   Participants also have the option of reinvesting the full amount of their dividends or a partial amount; however shareholders do not receive a discount when reinvesting their dividends (Investor Centre - IBM, 2011).   IBM’s DRP also allows shareholders the option of receiving a cash payout of their dividends earned, providing shareholders with flexibility (Investor Centre - IBM, 2011).   IBM’s DRIP is describes as a middle of the road investment vehicle as it is a low cost alternative to holding and reinvesting in IBM stock (IBM DRIP, 2011).   While the plan allows shareholders to make a...

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Drips. Anti Essays. Retrieved December 14, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Drips-168832.html


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