Reader says…

I am a Singaporean student who is interested in building up a dividend portfolio.

I like to seek your advise whether it is viable to reinvest dividends into shares of the same counter, as the commission seems too expensive to do so.

Is there any way which companies can give out share in place of dividends?

Will this be a sound approach to building a dividend portfolio?

AK says…

If we are investing for income, we want our investments to be able to pay dividends in cash.

Sometimes, companies might ask if shareholders would like to receive their dividends in cash or scrip (which means new shares)?

If there is an opportunity for arbitrage, then, for the income investor, taking the dividends in scrip might make sense.

And I mentioned it before:

“Many S-REITs have DRPs (or DRIPs), Distribution Re-investment Plan. Some readers asked me if I would take part in these plans …