Most dividend investors are familiar with a DRIP or a dividend reinvestment plan.

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DRIP stands for Dividend ReInvestment Plan. Many publicly held companies allow shareholders to reinvest dividends in company stock or buy additional shares through dividend reinvestment plans or DRIPs. A DRIP is a dividend reinvestment plan whereby cash dividends are reinvested to purchase more stock in the company.

By doing this youre using the compounding effect in your favor. This again allows you to earn compound interest. What is a Dividend Reinvestment Plan DRIP.

Dividend reinvestment plan DRIP. Alison Free Learning Providing Opportunities To People Anywhere In The World Since 2007. It means its an investment plan that allows investors to reinvest their cash dividends by purchasing addition shares or fractional shares on the dividend payment date.

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