DRIP Stock Investing: How to Collect More Stock on Autopilot

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DRIP is an acronym for Dividend Reinvestment Plan.

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It is an arrangement where dividends are automatically reinvested into more shares. Thus, a DRIP plan makes it easier and, at times, cheaper to reinvest dividends.

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A dividend is a way for the company to say thank you for investing in us, and dividends mostly come from the company’s profits in the previous year.

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A DRIP plan offers investors an opportunity to reinvest their cash dividend and purchase the company shares. However, they will need to buy the shares directly from the company.

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For instance, you have 1000 shares in a company that pays $1 per share in dividends.

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However, if we assume that the company’s stock is trading at $50 when receiving the dividend, you will be allocated an additional 20 shares instead of a dividend check.

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