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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
He also installed low drip-dry racks on the other side of the room.
Before hi-fi, credit cards, laser beams, supermarkets and the ballpoint pen; before dishwashers, drip-dry clothes, air conditioning, electric blankets, tumble dryers and before man walked on the Moon.
WASH-OUT: Fearne yells after ducking' IN A SPIN: She tries to cover up' DRESS SIGHS: Has anyone noticed yet' DRIP-DRY: She sees funny side Pictures: REXFEATURES.COM
We were before radar, credit cards, split atoms, laser beams, and before ballpoint pens, before dishwashers, tumble driers, electric blankets, air conditioners, drip-dry clothes...
We were before radar, credit cards, split atoms, laser beams and ballpoint pens: before dishwashers, tumble driers, electric blankets, air conditioners, drip-dry clothes and before man walked on the Moon.
Just wash it down with the shower head then leave the curtain fully open to allow it to drip-dry. As a last resort, you can buy sprays for mould, but I prefer not to use them and I've never bought disinfectant in my life.
In fact, I wear just a touch of raspberry lip balm and a drip-dry kimono like everyone else" Comedian Julian Clary 'We have two very good people from Portugal working in banqueting.