automatic dividend reinvestment

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Automatic Dividend Reinvestment

A practice or agreement in which dividends on a security are used to buy more of the same security, rather than disbursed to the investor in cash. Automatic dividend reinvestment 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.
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automatic dividend reinvestment

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
It doesn't hurt that the Stein Roe Young Investor Fund boasts an average annual return of 36.31% from March 1995 to March 1998, and will accept initial investments as small as $100 if you set up an automatic investment plan to salt away $50 a month.
As a plus, an automatic investment plan will allow your money to increase even if you forget about it.
Vanguard, in a note it posted for ETF and fund investors, advises that investors who are comfortable with their investment plans stick with those plans, including regular investments through payroll deductions, automatic investment plans, or target-date funds.
ShareBuiler is an online brokerage specializing in automatic investment plans. Details are at Aug 30, 2006
Get started with automatic investment plans, tax-favored savings and retirement accounts, and other convenient and rewarding ways that can make your net worth grow.

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