If you're a long-term owner of shares in SKYCITY Entertainment Group Limited-Ord (ASX: SKC), there is one clever and very easy way to boost your returns;
Sign up for the dividend reinvestment plan.
I know, I know: it sounds too simple to be clever, but with the current market volatility now could be the perfect time to take advantage and scoop up some discounted shares to compound for years and years to come.
How you win
Dividend Reinvestment Plans (DRPs) work by letting you invest your (after tax) dividends back into the company, free of brokerage. You forgo the immediate cash, but automatically compound the shares you own.
For SkyCity Entertainment, the price at which the shares are allocated is based on the volume weighted average sale price of shares sold through the New Zealand Stock exchange, the NZX, over five trading days around the 'record date' of 18 September 2015.
The current market volatility has slashed almost 14% off SkyCity's NZX listed shares in the last month and shares in my view are currently very attractive given the company's long-term growth prospects.
This in itself makes using a dividend reinvestment plan appealing, but throw in SkyCity's guaranteed 2% discount to the share price set under the DRP and we are onto a winner.
The discount separates SkyCity from Echo Entertainment Group Ltd (ASX: EGP), which also offers a DRP for its final dividend, but with no discount, and from Crown Resorts Ltd (ASX: CWN) which does not have the option of a DRP.
What you need to know
SkyCity's dividend has been set at NZ$0.10 per share, and will be paid on 2 October, 2015. However to be eligible investors need to register for the DRP essentially by the 'record date' of 18 September, 2015.
You can do this through the company's share registrar Computershare Investor Services, and you can find full details of SkyCity's DRP here.
