QAF: Dividend Reinvestment Plan

QAF Ltd has recently announced a Dividend Reinvestment Plan (DRIPS) for the financial year ended 31 December 2012 to allow its shareholders to reinvest their cash dividends by purchasing additional shares of the aforementioned company.

 

 

In a normal circumstances like this, I usually prefer to receive the dividends in the form of cash option. I don’t generally like to hold on to odd lot shares as I find it very difficult to remember and also to sell in the open market. However, what is attractive about the offer is that for investors who chose the DRIPS option, they will have the opportunity to purchase it at the issue price of S$0.891/share, which is about 7% discount to its current price of S$0.955.

 

Now, we are seeing more and more companies doing this in order to attract their investors to reinvest their dividends into the company in view of the long term outlook. A fellow blogger, AK71, had recently blogged about how AIMS AMP Reits are doing the same thing with regard to their DRIPS option.

 

Will I take the offer? I would love to do so if I own a larger amount of shares in the company. But with only 3 lots, the dividends (S$120) would only allow me to purchase 0.134 lot (134 shares) and it will make it very complicated for me should I decide to dispose all my holdings for QAF in the open market one day.

I am taking cash this time.