DRIP (redirected from drips)

DRIP

See dividend reinvestment plan.

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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.

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Dividend Reinvestment Plan (DRIP)

What Does Dividend Reinvestment Plan (DRIP) Mean?

A plan offered by a corporation that allows investors to reinvest their cash dividends back into the company by purchasing additional shares or fractional shares on the dividend payment date.

Investopedia explains Dividend Reinvestment Plan (DRIP)

A DRIP is an excellent way to increase the value of an investment. Most DRIPs allow an investor to buy shares commission-free and at a significant discount to the current share price. Most DRIPS do not allow reinvestments much lower than $10. This term sometimes is abbreviated as DRP.

Related Terms:
• Common Stock
• Compounding
• Dividend
• Dividend Yield
• Dollar-Cost Averaging—DCA