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 ?
Effective February 1, 2018 Chorus implemented a Dividend Reinvestment Plan ('DRIP') that allows Chorus to offer a discount of up to 5% from the average market price for shares purchased under the DRIP.
The Company also offers a Dividend Reinvestment Plan (the 'Plan'), which is eligible to holders of Common Shares and provides a convenient means to purchase additional Common Shares by reinvesting cash dividends at a potential discount and without having to pay commissions, service charges or brokerage fees.
In respect of the company's September 19, 2019 common share dividend payment date, the company will issue common shares from treasury in connection with the reinvestment of dividends and optional cash purchases pursuant to the company's Canadian Dividend Reinvestment and Share Purchase Plan and its US Dividend Reinvestment and Share Purchase Plan.
Coty is initiating a stock dividend reinvestment program giving shareholders the option to receive their full dividend in cash or to receive their dividend in 50% cash / 50% common stock.
In lieu of receiving their dividends in cash, holders of CWB's common and preferred shares may choose to have their dividends reinvested in additional common shares of CWB in accordance with the Dividend Reinvestment Plan (the Plan).
What are the implications of this disparity between the effectiveness of dividend reinvestment versus that of capital gains?
International Resource News-April 1, 2011--Portland General Electric Company implements Dividend Reinvestment and Direct Stock Purchase Plan(C)1994-2011 ENPublishing - http://www.enpublishing.co.uk
UDF managers elected to offer investors the Dividend Reinvestment Option allowing investors the choice to convert their dividend to units in the Fund.
All UDF unit holders as of June 13, will receive dividends and the dividend reinvestment option automatically will apply to all investors unless they opt out of it.
Bernard observed that the Notice is silent in respect of when the dividend reinvestment plan must be completed.
The initial offering is for up to 600 million shares of common stock priced at $10.00 per share and also offers up to 185 million shares of common stock at $9.55 per share under its dividend reinvestment plan.
A To purchase shares of these companies and many others without using a broker, you must enroll in a direct stock purchase plan or dividend reinvestment plan (DRIP).