Most recently, I elaborated on understanding the Scrip Dividend Scheme better and shared my choices for the Dividend Reinvestment Plan — OCBC Bank (O39) and CapitaLand Retail China Trust (AU8U). I had erred on the later, it should be corrected as Scrip Dividend Scheme (SDS), and not Dividend Reinvestment Plan (DRIP).
SDS and DRIP look the same, sound the same; but they are not synonymous.
What is common between Scrip Dividend Scheme and Dividend Reinvestment Plan?
Both allows existing shareholders an opportunity to increase their shareholding over time by adding shares in lieu of cash dividend.
What are the differences between Scrip Dividend Scheme and Dividend Reinvestment Plan?
Scrip Dividend Scheme reinvests the dividend at a fixed share price, called the Issue Price, which is announced in advance of the dividend pay-date. Dividend Reinvestment Plan reinvests the dividend at the prevailing share price on dividend pay-date.
Scrip Dividend Scheme usually creates new shares