Dividend Reinvestment Plan (DRP) Singapore: How It Works & Should You Elect?

A Dividend Reinvestment Plan (DRP) lets shareholders automatically reinvest cash dividends into additional shares of the same company at a set price, typically at a small discount to market. In Singapore, REITs often offer DRP as an alternative to cash distributions.

This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial adviser before making investment decisions.

What Is a Dividend Reinvestment Plan (DRP)?

A Dividend Reinvestment Plan (DRP) — sometimes called a scrip dividend scheme in Singapore — allows shareholders to elect to receive their cash dividends or REIT distributions in the form of additional shares or units instead of cash.

Rather than receiving a cash payout into your bank account, you receive new shares in the company or units in the REIT, typically issued at a slight discount to the prevailing market price (often 1–3%). This discount is the incentive for investors to choose scrip over cash.

DRPs are common among SGX-listed REITs and blue-chip companies as a mechanism to conserve cash while rewarding existing investors. For investors, it is a tax-efficient way to compound holdings without incurring brokerage commissions.

How Does DRP Work in Singapore?

The mechanics of a DRP in Singapore typically work as follows:

Declaration: The REIT manager or company announces a distribution/dividend and offers a DRP option alongside the cash alternative.
Election window: Shareholders elect their preference (scrip or cash) within a set window — typically 2–3 weeks before the XD date.
Issue price: New shares are issued at a discount to VWAP (volume-weighted average price) over a reference period, e.g. 5% discount to the 5-day VWAP before the XD date.
Issuance: New units are credited to your CDP or custodian account on or around the payment date. Fractions are typically rounded down, with the residual paid in cash.

For example, if Mapletree Logistics Trust declares a DPU of S$0.020 per unit and you hold 10,000 units (total entitlement S$200), and new units are issued at S$1.80 (5% discount to market S$1.895), you would receive 111 new units (S$200 ÷ S$1.80 = 111.1, rounded down) plus S$0.20 cash for the fractional unit.

DRP: Pros and Cons for Singapore Investors

Pros of electing DRP (scrip):

Compounding: Reinvesting distributions automatically grows your unit count, increasing future DPU income without incurring brokerage fees
Discount to market: New units are typically issued at a small discount — you acquire additional units below the current market price
No cash outflow: No need to manually reinvest dividends; the process is automatic once you elect
Tax neutral: In Singapore, dividends are generally tax-exempt (one-tier tax system), so the DRP election does not trigger extra tax

Cons of electing DRP (scrip):

Dilution: New units issued under DRP dilute existing unitholders’ stake if enough investors elect scrip. Large DRP elections can suppress unit prices.
No cash income: If you rely on distributions for living expenses, electing scrip means you forgo the cash payout
Cost basis complexity: Each lot of scrip units has a different cost basis, which complicates portfolio tracking and cost-of-carry calculations

Should You Elect DRP or Take Cash?

The DRP election decision depends on your investment goals:

Elect DRP if: You are accumulating wealth and do not need the cash income. The compounding effect of reinvesting at a discount to market — especially over 10–20 years — is meaningful. For a REIT yielding 6%, reinvesting all distributions can dramatically accelerate unit count growth.

Take cash if: You need the income for living expenses, or if you believe the REIT is fairly valued or overvalued (in which case the discounted issue price is still above intrinsic value). Also consider taking cash if you want to deploy distributions into different assets or REITs for portfolio diversification.

You are not locked into a single choice — most Singapore REIT DRPs allow you to elect per distribution cycle. Check your REIT’s announcement via SGXNet for each round’s election window and issue price.

Frequently Asked Questions

What is DRP in a Singapore REIT?

DRP (Dividend Reinvestment Plan), also called a scrip dividend scheme, allows REIT unitholders to receive additional units instead of a cash distribution. New units are issued at a small discount to market price, enabling compounding without brokerage fees.

Is DRP election automatic?

No — DRP election is typically opt-in each distribution cycle. You must submit your election within the specified window (usually 2–3 weeks before the XD date). If you miss the window, you receive cash by default.

Does electing DRP affect my tax in Singapore?

In Singapore, dividends from locally listed companies and REITs are generally tax-exempt under the one-tier tax system. Electing scrip does not trigger additional taxation. However, the cost basis of newly issued units (the issue price) is important for any future capital gains tracking.

How do I elect DRP for an SGX REIT?

Contact your CDP or broker (e.g. DBS Vickers, FSMOne, moomoo) to submit your DRP election before the deadline. Many online brokerages now allow DRP elections through their platform’s corporate actions section. For CDP-held units, you can also submit the paper election form sent by the company registrar.

Is DRP the same as scrip dividend?

Yes — in Singapore financial markets, DRP and scrip dividend are often used interchangeably. Both refer to the option to receive shares/units instead of a cash payout. Some companies use the term ‘scrip dividend’ while others call it ‘distribution reinvestment plan’ (for REITs).

Dividend Reinvestment Plan (DRP)