What is a Dividend Reinvestment Plan (DRIP)?

A Dividend Reinvestment Plan (DRIP) is a program that allows shareholders to automatically reinvest their cash dividends into additional company shares. The company will typically set a limit on how many shares. the investor can purchase in one transaction, for example, up to 100 shares with each DRIP purchase.

Some companies also offer “cashless” DRIPs that allow investors to automatically reinvest their dividends without purchasing stock. Investors that opt for this type of plan must use dividend-paying stocks like preferred stocks, common stocks, and money market funds.

A dividend reinvestment plan is a type of investment account that allows investors to reinvest or "roll over" their dividends to buy more shares of the company. The company pays out cash dividends from its profits and then gives shareholders a chance to buy more shares in the company with those funds. This core strategy is called "dividend reinvestment".

This form of investing has become popular with certain types of stocks, such as those that offer high dividend yields. The additional shares bought with reinvested dividends do not cost anything extra and, if all goes well, they provide an individual shareholder with capital appreciation in the future.

Benefits of DRIPs

There are three main benefits to owning DRIPs including:

• A DRIP allows an investor to achieve significant growth in their investment over time.
• The money the company receives from the reinvestment is used for expansion and growth, which benefits all stakeholders.
• A dividend reinvestment plan can provide a steady stream of income to investors each time they reinvest dividends, which is better than receiving a large sum at the end of the year.
• Some companies offer discounts on share purchase prices through a DRIP, which may be helpful for those who don't have a large investment amount.

To enroll in the plan and for further information give us a call at +1 (914) 455 0322. or send us a message.