automatic reinvestment

Automatic reinvestment

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Automatic Dividend Reinvestment

A practice or agreement in which dividends on a security are used to buy more of the same security, rather than disbursed to the investor in cash. Automatic dividend reinvestment is relatively common in mutual funds; investors agree to use dividends and other capital gains to reinvest in more shares of the mutual fund. While this involves assuming more risk in the mutual fund, it carries the possibility of higher returns.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

automatic reinvestment

The automatic purchase of additional shares of an open-end investment company using any dividends and capital gains distributions that are made by the firm. This option (in lieu of actually receiving payments) permits a mutual fund shareholder to increase his or her holdings in the fund. Taxes must be paid on the amount reinvested even though no funds are received directly. See also dividend reinvestment plan.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Also, the company said it maintains a "Dividend Reinvestment Plan" (DRIP) that provides for the automatic reinvestment of distributions into additional shares of common stock, unless a stockholder elects to receive the distributions in cash.
Investors would also have the option to reinvest the dividends (net-off tax) in MCB-PFPF (as there will be no automatic reinvestment option in MCB-PFPF) or they can utilize the dividend stream to meet their monthly expenses.
This dividend will not be eligible for automatic reinvestment under the company's Dividend Reinvestment and Stock Purchase Plan.
Profit rates have been reduced on the Regular Income Certificates - a five-year maturity scheme on which profit is paid monthly from the date of issue - by 1.32 per cent and on Defense Certificates - a ten-year maturity scheme with a feature of automatic reinvestment after maturity by 1.18 per cent.
Defence Savings Certificate scheme which is a10 years' maturity scheme with built in feature of automatic reinvestment after the maturity.
The Director General informed that at present the following National Savings Schemes (NSS) are in operation; Defence Savings Certificate scheme which is a10 years' maturity scheme with built in feature of automatic reinvestment after the maturity.
If fundamentals deteriorate or if dividends fall below expectation, automatic reinvestment in the same stock or continuing to hold the same share may hurt returns, says Khokhar.
And while most traditional funds permit automatic reinvestment of dividends and capital gains, ETFs generally do not.
If you're not spending investment gain checks as they come in, sign up for automatic reinvestment of interest and dividends.
Because of the automatic reinvestment feature, the price of these bonds is more sensitive to interest rate changes than the price of a conventional bond of similar quality and maturity.
To avoid being blindsided by the accidental application of the wash sale rule, CPAs should advise clients to find out if a reinvestment is scheduled to occur during the waiting period, and if so, opt out of the automatic reinvestment plan or change the scheduled disposal date.

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