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1.
With a dividend reinvestment plan (DRIP) for stocks, dividends are reinvested automatically for you so that you do not need to invest them yourself.
True. This is one of their many benefits: autopilot investing.
2.
Why is an economic moat important for a dividend-paying firm?
Both of the above. Moats are critical both for the sustainability of a dividend and for its growth potential.
3.
When are taxes on an investment's capital gains due?
In the year that the investment is sold. Although gains may occur, no tax is due until the investment is sold. This may or may not occur at one's retirement age.
4.
With a dividend reinvestment plan (DRIP) for stocks, what happens to reinvested dividends?
They purchase additional shares of stock for you. DRIPs will actually buy additional shares for you; this is a way of investing on autopilot.
5.
What are the two components of total return?
Dividends and capital gains. Total return includes both price appreciation (capital gains) and income (dividends).
