• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 14. Learning the Fundamentals of... > Dividend Reinvestment Plans

Dividend Reinvestment Plans

There is a way to invest in stocks without a brokerage account—a dividend reinvestment plan (DRIP). DRIPs are run by individual companies (or by a transfer agent working for the company) to permit investors to buy shares of the company’s stock. Purchases and sales are free in some cases, and a nominal charge is assessed in others. The name of these plans comes from the fact that dividends paid by the stock are automatically invested in new shares. This is unlike a standard brokerage account where dividends are paid to you in cash.

DRIPs offer several advantages. You can start investing in a DRIP for a modest amount because there are usually no minimum purchase requirements, and because fees are nonexistent or low, you do not have to worry about them eating into your investment capital. The automatic reinvestment of dividends helps your money grow. DRIPs are an excellent choice for long-term investments.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint