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 ?
Shareholders who wish to enroll for the first time in the enhanced Dividend Reinvestment Plan must do so prior to the July 19, 2017 ex-dividend date if they wish to participate in the Plan for this months dividend.
M2 EQUITYBITES-May 13, 2015-Five Oaks Investment declares plan for dividend reinvestment and direct stock purchase
BANKING AND CREDIT NEWS-March 27, 2014--Blackstone Mortgage Trust launches stock purchase, dividend reinvestment plan
equi serve, corn), a company that allows investors to make direct investments in publicly traded companies through Dividend Reinvestment Plans (DRIPs).
NEW YORK -- Ares Capital Corporation (NASDAQ: ARCC) today announces certain aspects and features of its dividend reinvestment plan to former Allied Capital Corporation stockholders.
Tahoe also reminded shareholders today that, on August 10, 2016, the Company announced the introduction of a dividend reinvestment plan (DRIP).
M2 EQUITYBITES-April 22, 2015-Royal Dutch Shell announces purchase of 254 A shares under Scrip Dividend Programme and Dividend Reinvestment Plan
The company has adopted a dividend reinvestment plan (DRIP) that provides for reinvestment of dividends on behalf of stockholders, unless a stockholder elects to receive cash.
One of the easiest and most affordable ways to build an investment portfolio is through a program called the dividend reinvestment plan (DRIP).
These direct stock-purchase programs are enhanced versions of dividend reinvestment plans or DRIPs.
The company offers a Dividend Reinvestment & Direct Stock Purchase and Sale Plan.
M2 EQUITYBITES-March 27, 2014--Blackstone Mortgage Trust launches stock purchase, dividend reinvestment plan