Dividend reinvestment plan
InvestingDefinition
A program that automatically uses cash dividends to buy additional shares of the company. Compounds returns powerfully over decades. Most large brokers offer DRIP as a one-click setting.
DRIPs avoid commission costs, often allow fractional-share purchases, and force the disciplined "compound it back" behavior that academic research shows drives the bulk of long-term equity returns.
DRIPs avoid commission costs, often allow fractional-share purchases, and force the disciplined "compound it back" behavior that academic research shows drives the bulk of long-term equity returns.