You can waste a lot of water leaving a dripping tap, but if you allow the dividends from your stocks to DRIP, you are building wealth? Wild eh?
What’s a drip (nice picture from flickr eh?), well the i is added in kind of, but it is Dividend Reinvestment Plan, is what the TLA (three letter acronym) means. Typically a stock, or mutual fund (I think) will offer this to their shareholders. You sign up for this and instead of getting your Dividends as cold hard cash, you get it as Stock in the company, and typically the stock purchase has no brokerage fees (which is always nice).
Some investing houses also offer a “virtual drip” where they reinvest the money for you in the stock (without brokerage fee).
Why DRIP Now?
Now I had forgotten about this method of investing, but thanks to the Moneysaver web site, I have remembered and am now about to sign up for DRPs for the bank stocks that I already own.
Other Dividend ReInvestment Program Articles
- Boy am I a DRIP ? OK a bit of a neophyte start to the discussion about DRiPs.
- Drip, drip, drip… a little more explanation of how I am using them.
- Dividend Reinvestment Update some of the work I have had to do to set up my DRiP .
- DRIPS: It Really Works! It has for me, mostly because I use them on Dividend All-Star stocks.
- DRIP: How’s that again? An attempt on my part to clarify what I said in the previous post.