A dividend reinvestment plan that uses dividends to purchase more shares directly from the company's treasury stock. Oftentimes, because the company is issuing the shares, it will offer the shareholder a small discount on the share price; this discount typically ranges from 2-4%.


The other common type of dividend reinvestment plan is the market DRIP. In a market drip, a company uses its cash dividends to purchase shares on the open market, rather than from its treasury. Using a DRIP can help companies to develop investor loyalty and a stable shareholder base. The advantages to shareholders include convenience and a lack of commission charges on acquiring new shares through a DRIP program

  1. Dividend Reinvestment Plan - DRIP

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  3. Dividend Policy

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    A financial ratio that shows how much a company pays out in dividends ...
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  1. What is a DRIP?

    "DRIP" is an acronym for dividend reinvestment plan, but the word also describes the way the plan works as investments grow ... Read Answer >>
  2. Cash dividend or stock dividend: Which is better?

    The purpose of dividends is to return wealth back to the shareholders of a company. There are two main types of dividends: ... Read Answer >>
  3. Can dividends be paid out monthly?

    Find out if stocks can pay dividends monthly, and learn about the types of companies most likely to do so and how monthly ... Read Answer >>
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