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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 ?
The insurer calculates that all our dripping taps add up to 460 million litres a year - enough to fill 184 Olympic-size swimming pools.
Students use dripping because it produces thicker clouds of vapor (according to 64% of respondents); because they get a stronger throat hit (28%); and because it makes the flavors taste better (39%).
"This study is the first systematic evaluation of the use of dripping among teens," said Suchitra Krishnan-Sarin, a professor in the department of psychiatry at the Yale University School of Medicine and the lead author of the study.
Sherrie Parks, executive director of the Dripping Springs Chamber of Commerce, said the town boasts 36 wedding venues in a 17-mile radius - the most of any city in Texas, Parks said.
The blood is skipping, dripping drop by drop; The men are dying in the trenches' mud.
Dripping, seeping, mixing, merging, and nourishing, Merian Soto's dynamic new La Maquina del Tiempo is a two-hour tapestry of dance and music.
Spread across the latter are roughly sixteen translucent white horizontal bands with rivulets of paint dripping below them.
Water will squirt through the holes and go every, which way instead of slowly dripping down to where you need it.
The behavior of dripping fluids may seem of more concern to plumbers than to Ph.D.s.
Against both the mythology of his having discovered the drip and the way dripping had become a mark of Abstract Expressionist identity, it is somewhat remarkable that there are very few drips to be encountered in Pollock's show upstairs, at least of the kind Mitchell made her own.