Everything You Need To Know About DRIP Stock Investing

DRIP is an acronym for Dividend Reinvestment Plan. It is an arrangement where dividends are automatically reinvested into more shares.

In a DRIP plan, instead of receiving that small dividend check at the end of every financial period, the company reinvests the dividend payout and buys more shares in a DRIP plan.

What is DRIP Stock Investing?

A DRIP plan can help maximize the value of your stock as you take advantage of the compounding returns, possible discounts, and dollar-cost averaging.

A DRIP plan offers investors an opportunity to reinvest their cash dividend and purchase the company shares.

How Does DRIP Stock Investing Work?

However, they will need to buy the shares directly from the company. Since the shares come from the company’s reserve, these aren’t offered through the stock exchange.

If you would like to benefit from DRIP investing, you need to have at least one share in company stock in your name. You can then get in touch with a broker to find out if they have a DRIP investment program.

How to Start DRIP Stock Investing?

A transfer agent usually handles the DRIP account, but they can also direct you to the right agent.

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