Who should go for Dividend Reinvestment Plans?
Traders who have this tendency of looking for modest increases periodically to their total portfolio without spending too much can also utilise this facility along with those who prefer to strengthen their current holdings instead of boosting up the number of companies where they hold stocks. People with family trusts designed to accumulate income for a specific period of time also finds Dividend Reinvestment Plans as an attractive option. It is to be mentioned that taking part in a DRP is voluntary. An investor is required to sign on an appropriate application form to get enrolled for all or a particular holding. The participants do hold the right to withdraw from the plan whenever s/he wants up to the closing date for a specific dividend. The companies also hold the right to suspend or close a plan. However, they need to give notice to the shareholders to do so.
