Westpac Banking Corp (ASX: WBC) has historically been one of the ASX's more reliable dividend paying shares.
It's been paying out dividends since 1983 and – prior to the pandemic – had never missed a payment.
In fact, the only interim or final dividend skipped by the big bank was its interim dividend of financial year 2020.
But owners of Westpac shares might not know they can up their holding in the bank, for free! Well, that's not entirely accurate, but there is a way for shareholders to increase their investment without shelling out any cash.
That is, Westpac's dividend reinvestment plan. Let's take a look at the nitty-gritty of the plan.
At the time of writing, the Westpac share price is $24.39, 1.16% higher than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is also up on Tuesday, having gained 0.67%.
All the details on Westpac's dividend reinvestment plan
Owners of Westpac shares have more than one choice as to how they receive their dividend payments.
Of course, they can take them as cash. The bank can deposit its dividends directly into shareholders' bank accounts. Investors can then choose how they spend the extra funds.
Alternatively, shareholders can engage with Westpac's dividend reinvestment plan. It allows investors to receive additional Westpac shares to the value of the dividends that would otherwise be paid to them.
Shareholders still receive franking credits from dividends reinvested under the plan.
How many shares an investor receives relative to their holding is determined by the market price of Westpac's stock.
Any residual value – that is, that which doesn't equal the value of a share – is carried forward to the next dividend payment.
There are no brokerage fees, commission, or stamp duty on shares handed out through the dividend reinvestment plan.
Owners of Westpac shares can choose to partly participate in the dividend reinvestment plan. They can also back out or join in at any time up until close of business the day after a dividend's record date.
But, unfortunately for some, the plan is only open to shareholders living in Australia or New Zealand.
Westpac is expected to drop its interim results and the details of its upcoming dividend on 9 May.
No doubt, all eyes will be on the Westpac share price in the lead up to its release.
