Definition
A program that automatically uses dividends to purchase more shares of the stock, helping your investment grow over time.
What to consider
- Automatic reinvestment can help compound your returns.
- It’s a hassle-free way to grow your share count.
- Check if there are any fees involved before enrolling.
Real world scenarios
- By enrolling in DRIP, Felix automatically reinvests his stock dividends, gradually compounding returns without manual trades.
- Mina appreciates the simplicity of DRIP—no need to track payout dates or worry about reinvesting small sums.
- Over time, DRIP grows Carlos’s position in several dividend-paying companies, contributing to steady portfolio gains.
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