Dividends

Dividend Stripping

You can buy and sell shares as they go ex-div, so you will be entitled to the franking credits.

There is a 45 day rule that applies if you acquire more than $5000 worth of franking credits.

Receiving the Dividend

Direct deposit or cheque

Dividend Reinvestment Plan

Instead of receiving a cash payment the company may buy you some shares instead.

Advantages

No brokerage on the new shares

Discounts may apply e.g. BSL 2.5%

Entitled to franking credits.

Disadvantages

There is a delay between the ex-div and the payment date. If you sell out of the company and forget that you have a DRP pending you may get a small parcel of new shares.

You may be given a different share. e.g. WDC gave me WDCN instead of more WDC. I had to wait another 6 months before the WDCN shares became WDC shares.

Bonus Share Plan

Instead of being paid via a DRP you can sometimes opt for a BSP. This still issues you shares, but you are not subject to income tax and no franking credits are received. I'm guessing that CGT will apply instead when you sell.