Dividend Reinvestment Plans (DRIP)

Investing / Portfolios
1

Hi everyone,

I was wondering if someone on this forum keeps a list of companies offering Dividend reinvestment Plans (DRIP)?

The ones I know are
BP, LGEN, BAT

I’m sure there are plenty more, it is however not that straightforward (for me at least) to figure out who’s offering such plans.

Many thanks

2

IMB (Imperial Brands) and OXSQ (Oxford Square Capital) offer them as well.

Not sure how to get a complete list.

Also, I believe companies offer different ways to DRIP, i.e. through corporate actions (I believe all of the ones listed so far) and through transfer agents, see e.g. Microsoft’s Investor Relations page on dividends and DRIP.

DRIP through corporate actions are AFAIK available to any shareholder. I don’t know anything about DRIP through transfer agents except that they exist.

3

May I ask why you’re interested in such DRIP plans? Is there a tax advantage to own such shares?

4

There’s a big advantage with fees: corporate actions are usually free* for shareholders. You’re issued - you get to “buy” - new shares with the dividends received without having to purchase them through your broker.

E.g. DRIPing into MAIN (which I forgot in the list above; they also offer DRIP through corporate actions):

  • I can currently receive 5 shares for this monthly dividend payer (rounded down from the 5.something shares I’m theoretically elible for)
  • If I receive the 5 shares as DRIP corporate actions, this costs me just 34 cents (even at greedy Swissquote)**
  • If I instead receive the dividend as cash and buy 5 shares of MAIN with that cash I pay at least $5 in trading fees (at Swissquote) for the same transaction of buying 5 shares.
  • Fee difference: given the current valuation of 5 MAIN shares at about $235 buying results in a transaction fee of over 2 percent compared to the 0.14% transaction fee of re-investing via DRIP.***

The fee issue might be moot at reasonable brokers like IBKR. I don’t have any positions eligible for DRIP there yet so I can’t really say.

Another advantage for those who don’t want to time the market for the companies (shares) they once chose for hopefully good reasons: any returns will just go back into the company that you chose already.
Not sure if you can automate this with corporate actions (probably not with Swissquote), but at the very least you can just click on the DRIP option when the corporate action is issued and stick to your set-and-forget plan.
For DRIPing via transfer agents, it might be possible to have a standing order to just re-invest without you ever being asked.

* Or cost a very small fee even at brokers like Swissquote (where fees are very high compared to brokers like IBKR).
** I receive the full dividend in cash, 5 shares are bought (or vice versa), and the remaining cash (not enough for another share) is mine.
*** Professional traders by the way pay transaction fees in the order of a few bips (one bip = basis point = 0.01%), from low single digit bips (high volume) to medium single digit bips (low volume).

5 Likes
5

No specific tax advantage but as @Your_Full_Name pointed out it is more interesting from a cost perspective.
I am in a situation where Swissquote is my broker and fees are horribly high in comparison to others.

1 Like
6

Thank you, I’ll have a closer look at IMB!

Otherwise I asked ChatGPT to give me a list of companies offering DRIPs but that was not very successful :wink: Mentioned GSK, National Grid and Unilever in addition to BP (which I own and confirm a DRIP through corporate actions).