What are the benefits of dividend reinvestment plans?
Enrolling in a DRIP is fairly easy. Cash dividends paid by the company are automatically reinvested into additional shares. Once the investor has enrolled in a DRIP, the process becomes entirely automated and usually requires minimal attention or monitoring. Many dividend reinvestment plans are often part of a direct stock purchase plan. If the investor holds at least one of his shares directly, he can have his checking or savings account automatically debited on a regular basis to purchase additional shares of stock, usually at no cost to the buyer. The Fee to purchase through dividend reinvestment programs are normally small, if any. Dividend reinvestment plans also allow the investor to purchase fractional shares. Over decades, this can result in significantly more wealth in the investor’s hands.
