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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.


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 ?
Test your fluids to identify and segregate your drip fluid contents.
If your shares are held for your account by a broker, bank, or other designated candidate (usually called a "Nominee") and you would like to participate in the DRIP, you should contact your broker, bank, or other designated candidate to enroll on your behalf.
Subsequent writings by Greenberg analogize the 1947-50 drip paintings to high Analytical Cubist works by Picasso and Braque, in my view a brilliant but misleading comparison.
It rehydrates and revitalises the body quickly, leading to it being used as a hangover cure and being dubbed the party girl drip.
Investors like Bernard Schlossman of Northridge think the world of DRIPs.
During 500,000 miles of operation, oil drip from a wire mesh breather system can result in as much as two quarts of oil," Clevenger said.
What to do if you're eyeing a stock that has no DRIP program?
Learn about eight growth and income DRIPs that should benefit from the new tax plan, and get much more DRIP information from Charles Carlson, including his Midyear Review of 2003 Predictions special report, by clicking: http://featuredexpert3bw.
Most financial experts stick to their guns in advising that portfolios should always have some stock investment The beauty in this is that DRIPS are an inexpensive way to invest in solid, blue chip companies.
The new line, called Enviroguard(TM), uses patented technologies to control oil drip and filter crankcase aerosols in diesel engine applications.
Furthermore, use Charles Carlson's analysis to learn all about the world of DRIPs, and don't miss out on a roundup of new no-load stocks and his "Reading The Market" special report, by clicking: http://featuredexpert3bw.
BNY is a New York bank which acts as administrator of such DRIPs for over 150 companies and funds.