Dividend Reinvestment Plan

(redirected from Dividend Reinvestment)

Dividend Reinvestment Plan (DRP)

Plan which provides for automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long term using dollar cost averaging. The DRP is usually administered by the company without charges to the holder.

Dividend Reinvestment Plan

A practice or agreement in which dividends on a security are used to buy more of the same security rather than be disbursed to the investor in cash. A dividend reinvestment plan is relatively common in mutual funds; investors agree to use dividends and other capital gains to reinvest in more shares of the mutual fund. While this involves assuming more risk in the mutual fund, it carries the possibility of higher returns.

dividend reinvestment plan (DRIP)

A plan that allows stockholders to automatically reinvest dividend payments in additional shares of the company's stock. Instead of receiving the usual dividend checks, participating stockholders will receive quarterly notification of shares purchased and shares held in their accounts. Dividend reinvestment is usually an inexpensive way of purchasing additional shares of stock because the fees are low or are completely absorbed by the company. In addition, some companies offer stock at a discount from the existing market price. Usually these dividends are fully taxable even though no cash is received by the stockholder. Also called automatic dividend reinvestment, reinvestment plan. See also super DRIP.

Dividend reinvestment plan (DRIP).

Many publicly held companies allow shareholders to reinvest dividends in company stock or buy additional shares through dividend reinvestment plans, or DRIPs.

Enrolling in a DRIP enables you to build your investment gradually, taking advantage of dollar cost averaging and usually paying only a minimal transaction fee for each purchase.

Many DRIPs will also buy back shares at any time you want to sell, in most cases for a minimal sales charge.

One potential drawback of purchasing through a DRIP is that you accumulate shares at different prices over time, making it more difficult to determine your cost basis -- especially if you want to sell some of but not all your holdings.

References in periodicals archive ?
The quarterly dividends, in conjunction with the Dividend Reinvestment Plan, provide shareholders with a current return and the opportunity to expand their investment in the company," said Joseph P.
July 20 /PRNewswire/ -- Investors who participate in dividend reinvestment plans (DRPs) don't like down markets, but they do appreciate the opportunity to buy more shares of a stock they already own and believe in, according to Sumie Kinoshita, Editor of the "Guide to Dividend Reinvestment Plans.
Correll also noted that the Company's next dividend reinvestment date under the Company's Dividend Reinvestment and Common Stock Purchase Plan is March 1, 2006.
May 25 /PRNewswire/ -- Evergreen Enterprises releases the 13th edition of the "Directory of Companies Offering Dividend Reinvestment Plans.
Dividends declared by the company are eligible for direct reinvestment in the company's common stock under its Dividend Reinvestment and Stock Purchase Plan.
SEATTLE, April 30 /PRNewswire/ -- The Boeing Company (NYSE: BA) has announced a dividend reinvestment and stock purchase plan for its shareholders.
DCT anticipates closing the primary offering upon the earlier to occur of (1) the Company raising an additional $100,000,000 in gross proceeds from the sale of its common stock, not including proceeds from its dividend reinvestment plan, or (2) the close of business on January 31, 2006.
July 7 /PRNewswire/ -- Dividend reinvestment plans (DRPs) offer a way around the difficulty of executing stock trades within the new three-day settlement (T+3) requirement.
Coastal Financial Corporation offers Shareholders a convenient Dividend Reinvestment and direct Stock Purchase Plan which provides existing and new shareholders a convenient means for making purchases of Coastal Financial shares free of fees and brokerage commissions.
April 21 /PRNewswire/ -- Evergreen Enterprises releases the 12th edition of the "Directory of Companies Offering Dividend Reinvestment Plans.
Registered shareholders who are enrolled in the Dividend Reinvestment Plan will receive stock based on the terms described above, which is slightly different than the existing plan.
has introduced a new dividend reinvestment program for its discount brokerage customers who invest in stocks and closed-end funds.