Dividend Reinvestment Plan


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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 ?
These direct stock-purchase programs are enhanced versions of dividend reinvestment plans or DRIPs.
Thomas Gutierrez, Xerium's Chief Executive Officer, said, "We are pleased to have secured additional financial flexibility through the amendment to our senior credit facility and to have received the commitment from the Apax entities to reinvest cash dividends received in 2007 in our common stock through a dividend reinvestment plan as described above.
Former Allied Capital registered stockholders (those who held their shares directly with Allied Capital's transfer agent) will be automatically enrolled in Ares Capital's dividend reinvestment plan and any cash dividends Ares Capital declares will be automatically reinvested in additional shares of Ares Capital common stock rather than being paid to them in cash.
The Disk Directory is an off-shoot of Evergreen Enterprises' loose-leaf service, Guide to Dividend Reinvestment Plans and their paperback, Directory of Companies Offering Dividend Reinvestment Plans.
The exemption will allow corporations avoid the long, individual process of requesting approval from the Commission before instituting a direct, initial-purchase dividend reinvestment plan (DRP).
Shareholders who participate in the Company's Dividend Reinvestment Plan will have their distributions reinvested in an equivalent amount of shares of the Company.
Shareholders enrolled in the dividend reinvestment plan as of December 15, 1994 will be able to receive their distribution in shares of common stock of the fund.
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.
3 /PRNewswire/ -- Camden Property Trust (NYSE: CPT), a multifamily real estate investment trust, announced today that it has filed a dividend reinvestment plan allowing the issuance of up to 500,000 common shares.
Highlights of the dividend reinvestment plan include:
Pursuant to a Dividend Reinvestment Plan offered to shareholders of Spectris plc (the Company), whose names appeared on the register of members at 16 October 2015, the following Directors/PDMRs of the Company acquired shares on 13 November 2015 at a price of [pounds sterling]16.
BNC Bancorp shareholders may take advantage of the BNC Bancorp Dividend Reinvestment Plan, which provides a convenient, economical way for shareholders to increase their holdings of BNC Bancorp's common stock.