Dividend Reinvestment Plan - DRIP


DEFINITION of 'Dividend Reinvestment Plan - DRIP'

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.


Loading the player...

BREAKING DOWN 'Dividend Reinvestment Plan - DRIP'

A DRIP is an excellent way to increase the value of your investment. Most DRIPs allow you to buy shares commission free and at a significant discount to the current share price. Most DRIPS don't allow reinvestments much lower than $10.

This term is sometimes abbreviated as "DRP".

  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Treasury DRIP

    A dividend reinvestment plan that uses dividends to purchase ...
  3. Systematic Investment Plan - SIP

    This is a plan where investors make regular, equal payments into ...
  4. Automatic Investment Plan - AIP

    An investment program that allows investors to contribute small ...
  5. Reinvestment

    Using dividends, interest and capital gains earned in an investment ...
  6. Direct Stock Purchase Plan - DSPP

    An investment service that allows individuals to purchase a stock ...
Related Articles
  1. Investing Basics

    Best Places to Find High-Dividend Yield Stocks

    Learn about the advantages of stocks with good dividend yields, such as income, stocks in defensive sectors and strong-performing companies.
  2. Investing Basics

    6 Reasons Why Dividends Should Be Reinvested

    Learn about the advantages of dividend reinvestment programs and how they may benefit longer-term investors who want to build a position in a company.
  3. Investing Basics

    How Does a Dividend Reinvestment Plan Work?

    A dividend reinvestment plan allows investors to use their dividends to purchase more shares of the corporation’s stock, rather than receiving payment.
  4. Fundamental Analysis

    The Perks Of Dividend Reinvestment Plans

    These plans offer shareholders a way to directly invest in some of the top companies without the commissions.
  5. Investing Basics

    How And Why Do Companies Pay Dividends?

    If a company decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments ...
  6. Investing Basics

    Dividend Facts You May Not Know

    Discover the issues that complicate these payouts for investors.
  7. Stock Analysis

    If You Had Invested Right After Coca-Cola's IPO

    Discover how one $40 share, with dividend reinvestment, over 90 years ago in the Coca-Cola Company would have made you a multimillionaire today.
  8. Stock Analysis

    If You Had Invested Right After Cisco's IPO

    Discover how Cisco became one of the greatest IPOs in history during the 1990s and how it continues to innovate and move forward today.
  9. Stock Analysis

    If You Had Invested Right After Amgen's IPO

    Discover how $1,000 invested in Amgen during its initial public offering (IPO), without reinvesting dividends, would be worth over $427,000 as of November 2015.
  10. Stock Analysis

    The Biggest Risks of Investing in ConocoPhillips Stock

    Understand the risks of investing in ConocoPhillips stock. Learn about how there is a risk of a dividend cut due to lower prices for crude oil.
  1. What average annual return is typical for a long term investment in the real estate ...

    Average annual returns in long-term real estate investing vary by the area of concentration in the sector. Average 20-year ... Read Full Answer >>
  2. How are dividends usually paid out?

    Dividends are usually paid in the form of a dividend check, but they may also be paid in additional shares of stock. The ... Read Full Answer >>
  3. How can I purchase stocks directly from a company?

    There are a few circumstances in which a person can buy stock directly from a company. The following is meant to cover some ... Read Full Answer >>
  4. Is a Canadian resident allowed to participate in a direct stock purchase plan from ...

    There is no law that prevents Canadians from participating in direct stock purchase plans offered by U.S. companies. There ... Read Full Answer >>
  5. What effect does a company's dividend reinvestment plan have on its stock price?

    When a dividend is received, an investor has two options: to keep the proceeds in a bank account or reinvest them. For the ... Read Full Answer >>
  6. What's the smallest number of shares of stock that I can buy?

    The answer to this question is not as straightforward as it seems. Many people would say that the smallest number of shares ... Read Full Answer >>
  7. What is a DRIP?

    The word "DRIP" is an acronym for "dividend reinvestment plan", but "DRIP" also happens to describe the way the plan works. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center