Do Flight Centre shares have a dividend reinvestment plan?

Can the travel agent's shareholders reinvest their dividends? Let's take a look…

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published April 1, 2022 12:22 pm AEDT

Does the Flight Centre Travel Group Ltd (ASX: FLT) share price have a dividend reinvestment plan? Good question.

Dividend reinvestment plans (DRIPs) are often a popular option for investors if a company does offer one. A DRIP allows investors to automatically reinvest a dividend payment back into the company that pays it. This is done by election, and means that instead of receiving a dividend in the form of a cash payment, the investor is issued new shares of the company instead.

Many ASX shares, particularly blue-chip shares, offer dividend reinvestment plans. Some even come with a discount, meaning that if an investor chooses a DRIP, they will get a small bonus — the new shares issued will be worth slightly more than if the investor opted to receive the dividend in cash.

Remember, there's no free lunch here though. If you reinvest your dividend through a DRIP, the Australian Taxation Office (ATO) usually still treats this situation as though you had received the cash. So a DRIP is certainly not some kind of legal tax dodge — your dividends are taxed the same way, whether they are received as cash or reinvested.

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What about the Flight Centre dividend?

So that takes us to Flight Centre. Do Flight Centre shares offer a DRIP? Well, the answer is a definitive no.

For one, a company needs to actually pay out dividends if investors want to utilise a DRIP. And Flight Centre hasn't paid a dividend for years now. Its last shareholder payment came back in October 2019. Flight Centre had actually announced a 2020 interim dividend, but the company was forced to cancel it due to the impacts of the COVID-19 pandemic.

But Flight Centre did not even offer a DRIP when it was paying a dividend anyway. Investors had no option but to receive their Flight Centre dividend in cash. If the company ever returns to paying out dividends, investors might well have the option of a DRIP when that does occur. But we shall have to wait for that day to come to see.

The Flight Centre share price has taken a tumble so far today. This ASX travel share is currently down by 1.07% at $19.47 a share. That still puts it up around 4.3% in 2022 so far though. At this share price, Flight Centre has a market capitalisation of $4.02 billion.

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