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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).

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 classic literature ?
Five minutes later the landscape was covered with fleeing boys, many of whom dripped blood upon the snow in token that White Fang's teeth had not been idle.
Defiling the trunks of the trees were broad maculations of crimson, and blood dripped like dew from their foliage.
The ancients, the fathers of the Church, the moderns, the Scriptures, the Arabians, were each sent hurtling against the other, while the rain still dripped and the dark holly-leaves glistened with the moisture.
I dripped with sweat, but I never ceased from my stride, though I could feel exhaustion coming on.