What Are DRIPs (Dividend Reinvestment Plans)?
DRIP (or DRP) is an abbreviation for Dividend ReInvestment Plans. DRIP is an investment plan that allow us to reinvest dividends (to use dividends to buy more stocks) without paying brokerage commissions. Some DRIPs allow purchasing additional stocks, also without paying brokerage commissions. Usually (but not always) DRIPs don’t charge commissions. On the other hand the company might give you a discount of 3-5%. To sign in to the DRIP you should already have at least one share of the company on your name. Some companies request owning a minimal number of shares in order to sign in to their DRIP (for example HP). Therefore, you must use a broker to buy the first shares, or buy them directly from the company. Note that not all companies allow direct purchasing. Usually a company that allows direct purchase allows DRIP. DRIP doesn’t necessarily mean that you can purchase shares directly. So what is the point if you have to go to the broker anyway? The benefit is in the possibility to inv
