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.