Dividend reinvestment plans (DRIPs or DIPs) are schemes offered by companies that allow shareholders to reinvest their cash dividends by foregoing the cash dividends to purchase additional shares for the full amount of the dividends that was payable or a fraction of it. DIPs is an excellent way for investors to expand their net worth of their portfolio by gradually accumulating shares instead of cashing the dividends and using it to meet personal needs. That way, the investor adds additional shares anytime cash dividends are declared. DRIPs often have different terms and conditions depending on the company. Some terms are more favorable to investors than others. This paper seeks to explore the DRIPS of three companies: Cadbury Plc, Daimler Plc, and Delmonte Plc. It then compares and contrast the terms of the DRIPs offered by the three companies.
Cadbury Plc offers DRIPs. It has a minimum enrollment of one share. It offers a direct purchase option. It requires investors to make a minimum initial purchase of 250 dollars to be eligible. It charges a dividend reinvestment fee of 5 percent up to a maximum of 2.50 dollars. It also has a reinvestment commission of 1.00 dollars. It allows for partial dividend reinvestment. Information on the dividend yield of Cadbury Plc was not available. Therefore, it could not be ascertained.
Daimler Plc offers DRIPs. The company is in the motor vehicle and passage car industry. It has a minimum enrollment of one share. It offers a direct purchase option. It requires investors to make a minimum initial purchase of 1000 dollars to be eligible. It charges a dividend reinvestment fee of 5 percent up to a maximum of 3.00 dollars. It also has a reinvestment commission of 1.00 dollars. It allows for partial dividend reinvestment. It offers a dividend yield of 1.8 percent.
Delmonte Foods Plc offers DRIPS. It is in the canned foods and vegetables industry. It has a minimum enrollment of one share. It offers a direct purchase option. It requires investors to make a minimum initial purchase of 200 dollars to be eligible. It charges a dividend reinvestment fee of 5 percent up to a maximum of 5.00 dollars. It also has a reinvestment commission of 1.00 dollars. It allows for partial dividend reinvestment. It offers a dividend yield of 2.00 percent.
The DRIPS offered by the companies share certain common characteristics. All of them have the same minimum enrollment, which is one share. All of them offer direct purchase option. All of them have a minimum initial purchase. However, the threshold is different for the different companies. Daimler Plc has the highest at 1000 dollars while Delmonte Plc has the lowest at 200 dollars. All of them charge a dividend reinvestment fee of 5 percent, but with different maximum. For instance, while the maximum for Cadbury Plc is 2.5 dollars, which of Daimler Plc is 3.00 dollars. Similarly, they all have a dividend reinvestment commission of one dollar. They all allow investors to invest only part of their dividends if the wish. There is only one key difference: the dividend yields differs across the companies. The dividend yield of Daimler Plc was 1.8 percent while that of Delmonte Plc was 2.0 percent. Information on the dividend yield of Cadbury Plc was not available.
References
DRIPS Database. 2016. "CADBURY PLC." http://www.dripdatabase.com. March 22. Accessed March 22, 2016. http://www.dripdatabase.com/ShowDRIP.aspx?Ticker=CBY.
—. 2016. "DAIMLER PLC." http://www.dripdatabase.com/ShowDRIP.aspx?Ticker=DAI. March 22. Accessed March 22, 2016. http://www.dripdatabase.com/ShowDRIP.aspx?Ticker=DAI.
—. 2016. "DEL MONTE FOODS CO ." http://www.dripdatabase.com. March 22. Accessed March 22, 2016. http://www.dripdatabase.com/ShowDRIP.aspx?Ticker=DLM.
