Distribution Reinvestment


DEFINITION of 'Distribution Reinvestment'

A process whereby the distribution from a limited partnership, real estate investment trust (REIT) or other pooled investment is automatically reinvested into common units or shares in a fund, often at a discount to the current market price. Investors can set up distribution reinvestment plans with the partnership itself, or with a broker through which the units are held.

Also known as a DRIP, but not to be confused with dividend reinvestment plans (also called DRIPs), which are found in many large-cap stocks and mutual funds. Most distributions are done quarterly, but some may occur on a monthly basis.

BREAKING DOWN 'Distribution Reinvestment'

Investors who participate in these programs also generally have commissions and other fees waived, making it an advantageous and affordable way to grow their investment. Meanwhile, the financial managers have a stable way to grow assets with current investors.

  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. Unit Investment Trust - UIT

    An investment company that offers a fixed, unmanaged portfolio, ...
  3. Stock Dividend

    A dividend payment made in the form of additional shares, rather ...
  4. Automatic Reinvestment Plan

    An investment program in which capital gains or other income ...
  5. Dividend Reinvestment Plan - DRIP

    A plan offered by a corporation that allows investors to reinvest ...
  6. Limited Partnership - LP

    Two or more partners united to conduct a business jointly, and ...
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