MANAGEMENT

Detailed explanation-1: -For long-term investors, reinvesting dividends has several benefits: You don’t have to think about investing. It’s automatic. You’re buying at various prices, averaging out the price per share over the long term.

Detailed explanation-2: -You invest $20, 000 when the stock price is $20, so you end up with 1, 000 shares. At the end of the first year, you receive a dividend payment of 50 cents per share, which comes out to $500 (1, 000 × $0.50). The stock price is now $22, so your reinvested dividend buys an extra 22.73 shares ($500 / $22).

Detailed explanation-3: -Some companies offer dividend reinvestment plans (DRP). These enable investors to automatically reinvest dividend payments into new shares in the company. DRPs generally allow investors to reinvest either a portion or all of a dividend payment into new shares.

Detailed explanation-4: -A dividend reinvestment plan (DRIP or DRP) is a plan offered by a company to shareholders that it allows them to automatically reinvest their cash dividends in additional shares of the company on the dividend payment date.