While we strongly encourage reinvesting earnings, we don't advise using a Dividend Reinvestment (DRIP) program.

The main reason for this is that using a DRIP program creates a new block or purchase or fractional shares every time a dividend is issued.

In the short term this might not be much of an issue, but if the club holds a stock for even five years before selling, then the treasurer might have 20 different purchase dates and numbers of shares to reconcile vs. the 1099 when preparing the club taxes

Instead, we suggest holding on to the cash from dividends until the club can afford to buy one or more whole shares of stock. In addition to making any Sale transactions easier to keep track of, this also means the club has more control over the cost basis of the security; instead of being at the mercy of whatever the stock price happens to be on the day the dividend is issued, the club can keep track of the stock price and potentially buy shares at a better price than what they get using a DRIP plan.