Dividend Reinvestment Plan - DRIP

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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.

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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".

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