DRIP (Dividend Reinvestment Program) allows you to automatically reinvest cash dividends into additional shares of the same company or ETF. This way, you can grow your investments effortlessly!
How does DRIP work?
Eligibility:
Participating companies: Not all companies offer DRIP. Only companies that have opted for this program allow the automatic reinvestment of dividends.
Examples in the US*: 3M (MMM), Abbott Laboratories (ABT), Apple Inc. (AAPL), AT&T Inc. (T), Bank of America (BAC), Bristol-Myers Squibb (BMY), Cisco Systems (CSCO), Coca-Cola Company (KO), ExxonMobil (XOM), Intel Corporation (INTC), Johnson & Johnson (JNJ), Microsoft Corporation (MSFT), PepsiCo (PEP), Procter & Gamble (PG), Qualcomm (QCOM) & Sherwin-Williams (SHW).
*Note: Check the dividend prospectuses in the public information of each company to verify this.
Eligible shareholders: Shareholders must own shares of participating companies and activate the dividend investment option in Hapi to be eligible for DRIP.
Automatic Reinvestment:
Cash dividends are automatically reinvested in additional shares of the same value or fund.
Additional shares are purchased without extra commissions, which can increase your long-term returns.
Manual Reinvestment:
For companies that do not offer DRIP, you will receive the dividends as a balance in your purchase power in the account and can reinvest them manually through Hapi.
Benefits of DRIP:
Compound Growth: Take advantage of the power of compound interest by automatically reinvesting your dividends.
Convenience: Automate the reinvestment process, saving you time and effort.
No Commissions: Reinvestments through DRIP are generally commission-free, maximizing your investment.
When will my dividend be reinvested?
By regulatory rules, there is usually a waiting period of at least 10 days between the dividend announcement (the "declaration date") and payment to shareholders (the "payment date"). Dividends will be reinvested during market hours (9:30 AM to 4 PM ET) on the trading day after the dividend payment date. Your dividend may not be reinvested right at market open.
Don't know what the "declaration date" is? You can learn more here.
Are there any costs associated with DRIP in Hapi?
No, activating the dividend reinvestment program in Hapi has no additional commissions. Some fees may apply depending on the conditions of each company's DRIP.
Are there taxes in the U.S. for dividends within DRIP?
For some companies, a 30% tax (U.S. tax) applies to dividends going into the program. This means the dividend reinvestment is from the net amount after tax deduction. This will depend on the conditions of each company's DRIP.
Don't know what a dividend is? You can learn more here.
If you have any questions about this or any other topic, our team is always ready to help.
You can contact our support team here. We're here to help!