Dividend reinvestment plans offer which advantages?
1. deferment of federal income taxes
2. a convenient means to accumulate shares
3. goodwill achieved by the firm by providing another service for its stockholders

Question

Quizplus · Accepted Answer

Dividend reinvestment plans (DRIPs) provide a convenient way for investors to accumulate more shares by reinvesting dividends paid by the company. They also foster goodwill among shareholders by offering an additional service. However, they do not offer deferment of federal income taxes; dividends reinvested through DRIPs are still subject to taxation in the year they are paid.

Dividend Reinvestment Plans Offer Which Advantages