Quick recap: a dividend reinvestment plan aka DRIP is an investment strategy that allows shareholders to automatically reinvest their cash dividends into additional shares or fractional shares of the underlying stock.

In this exercise, you’ll assume you’ve decided that you want to dabble in some dividend reinvestment and put together a dividend reinvestment plan for a stock of your choice.

Instructions

Select a stock:

• Choose one dividend-paying publicly traded company that interests you.

• Ensure that the company offers a Dividend Reinvestment Plan (DRIP).

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Gathering Information:

• Company Name and Ticker Symbol: Note down the full name and ticker symbol of the selected company.
• Dividend Information: Look up the following details about the company's dividends:

• Dividend per Share
• Dividend Yield
• Dividend Payment Frequency (e.g., quarterly, annually)
• Historical Dividend Growth Rate (if available)

Note: to find out whether a stock pays dividends, you can use several tools and resources. Some of the most popular tools you can use include:

• Investopedia provides detailed information on dividends, including yields, annual dividend amounts, and dividends per share. This guide from Investopedia should help.
• Dividend.com is also a top resource for identifying high paying dividend stocks.

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Understand the DRIP:

• Research how the company's DRIP works. This typically includes:some text
  • How to enroll in the DRIP
  • How dividends are reinvested (e.g., purchasing additional shares)
  • Any fees associated with the DRIP
  • Whether partial shares can be purchased

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Document Your Findings:

Create a detailed report or table to record the following details for your selected company:

• Company Name
• Ticker Symbol
• Dividend per Share
• Dividend Yield
• Dividend Payment Frequency
• Historical Dividend Growth Rate
• DRIP Enrollment Process
• Fees and Costs
• Any Other Relevant Information

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Calculate the Impact of the DRIP:

• Assume an initial investment amount and calculate how dividends would be reinvested over a period of time (e.g., 1 year, 5 years).
• Use the dividend yield and payment frequency to estimate the number of additional shares purchased through the DRIP.
• Create a hypothetical scenario showing the growth of your investment through reinvested dividends.

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