denk12, it depends in what entity you hold your IMF shares and...

denk12,
it depends in what entity you hold your IMF shares and what tax rate that entity is on.

To pay a $1 dividend, IMF earned $1.42857 pre tax and paid 30% company tax on $1.42857 leaving it with $1 of after tax profit
IMF pays $1 fully franked dividend and attaches a franking credit of $0.42857
Shareholder can receive the $1 as cash or elect to receive it in IMF shares pursuant to the DRP
Either way the shareholder's Taxable Income is $1 plus $0.42857 franking credit
If the Australian resident shareholder's tax rate is zero such as a pension phase super fund, then when it files its tax return, it will be taxed on $1.4287, pay tax of zero and receive a tax refund of $0.4287 because of the rebate from the franking credit
If the Australian resident shareholder's tax rate is 15% such as an accumulation super fund, then it will be taxed on the $1.4287. Tax payable is $0.2143 (15% of of $1.4287) but because of the rebate, will receive a tax refund of $0.2144 ($0.2143-0.4287)
If the Australian resident shareholder's tax rate is 30%, then the rebate will equal the tax and no further tax is payable but if IMF shares are received pursuant to the DRP then those shares will have a cost for tax purposes of $1 which will reduce the tax payable whenever the entire IMF shareholding is realised for tax purposes. If instead IMF just retained its earning without paying a dividend with a DRP, the entire shareholding should be worth the same but for tax purposes the cost would not have been increased by the $1 so $0.30 extra tax would have been payable

For IMF, the DRP has not changed the amount of cash available to the business (for accounting and tax it is paid out and immediately received back from the issue of the new DRP shares)

Therefore for all relevant parties a dividend with a DRP can be the same or better than no dividend.
The only exception is shareholders who are on the 42% and 48% marginal tax rates and who do not expect to be paying tax on gains from selling their IMF shares. Their position could be remedied, if IMF also offered a Bonus Share Plan in lieu of dividends (such as offered by AFIC)

Some shareholders may choose not to participate in the DRP and those shares can be placed by IMF in the market without diluting shareholders (other than those who chose not to participate in the DRP and therefore economically made a decision to sell part of their investment in IMF for cash)