I’m planning to buy RHB (between 5k to 10k units) but something that’s given me a pause is the Dividend Reinvestment Plan. So far, I’ve not purchased any stocks with Dividend Reinvestment Plans. I see that most banks have this option now.

I’m hoping to understand more about Dividend Reinvestment Plans:

1) Is it fair to say it’s a no brainer? You’re buying MORE of the business (though if everyone exercises their entitlement, proportionately there will be no difference) at below market value. If you don’t buy, your proportionate ownership of the company drops.

2) Is there a scenario where it makes more sense to not elect for reinvestment?

3) How complicated is it? Can it be done securely online? What if you submit the hard copy form but it reaches delayed or gets lost in mail?

4) Is Dividend Reinvestment Plan fair for retail investors?

5) Anything to take note of?

6) If I subscribe and get some odd lots, can they be made even by getting more odd lots next year? Example 63 shares from Dividend Reinvestment Plan this year and 37 next year, does it become 1 round lot?

Read more here at https://dividendmagic.com.my/dividend-reinv...-work-malaysia/

DRIP has more advantages than cons because those who are enrolled are holding for the entire life and rarely sells

Discount on it is attractive and compounding is the key and if you look at selling it then DRIP is not for you then 🤦‍♀️

RHB last drip at https://www.rhbgroup.com/files/investor-rel...P_Statement.pdf

This post has been edited by xander2k8: Jan 21 2023, 12:16 AM

Yes definitely I'm asking all these questions as a potential long-term investor.

This post has been edited by contestchris: Jan 21 2023, 12:19 AM

If long term investor n the company continues to generate good cashflow, then its good.

Maybank has been doing this for many years, u dont see many complaints for LT investors there.

No high risk set back except for continued dilution with each offered DRP.

1) it's not always a no brainer

2) depending on the number of shares to be converted vs the expectation of the future price of the stock vs the cost of doing DRIP.

3) nowadays can do online but i assume different company, different trustee company? But very seamless, i paid everything online.

Rm3 for transaction fee, rm10 stamp duty. If the number of shares too little or price is too high, i dont do DRIP.

6) yes. It adds up. Now my shareholding is xx64 shares. Accumulate >100 shares.

It's also easier to sell odd lots on your own without needing to call remisier. At least my brokerage can la. Hong leong app not too bad.

This post has been edited by adele123: Feb 11 2023, 08:13 AM

DRP is BS fyi. It's conceptualized as they need to get rid of those treasury shares to other shareholders accrued due to the reigning Directors 😑

As for odd lots you can't sell nor accumulates nor transfer away to anyone except for immediate family members but can be donated to BURSA for free 😡

Nonsense, DRP has no relation to treasury shares.

Maybe not for RHB, but what most companies does is take the $$$ you are entitled and give you shares accrued in their treasury account, if you so opted for DRP 😑

It does for those for small companies with low regulations 🤦‍♀️

For highly regulated sectors like banking it is different because you would have to seek approval from the regulators like BNM and SC beforehand

I mean there's nothing wrong in doing that either. It's the same thing end of the day.

BTW what companies do DRP with treasury shares? Can share example?

Iinm MYEG recently did it with KWAP

Some companies does it with institutional outfits like EPF, KWAP, PNB and Khazanah in exchange for usually short term borrowings

Gamuda used to do that until their international expansion with their ventures