Stock Dividend Programs - Is It Time To Turn Off The DRIP?

For as long as corporations have been paying dividends and trusts have been paying distributions, issuers have been seeking ways to encourage their securityholders to reinvest those cash payments into the issuer. These programs have typically taken the form of dividend or distribution reinvestment plans (DRIPs), which in their various incarnations have enabled securityholders to direct that cash dividends or distributions be used to acquire additional securities of the issuer from treasury or the open market; at the prevailing market price or at a discount, some with an ability to contribute further cash to acquire even more securities and, more recently, with an ability to direct those securities to a plan broker for subsequent sale in exchange for a premium cash payment pursuant to so-called "premium" DRIPs. DRIPs have largely been a win-win scenario, enabling securityholders to maximize their investment in an issuer in a convenient and economical way without