DRiP Primer

How DRIPs Work

Dividend Reinvestment Plans, or DRIPs, allow shareholders to reinvest dividends received from their stock holdings into additional shares of stock in the company in which the shareholder is invested. Most companies that allow dividend reinvestment also allow shareholders to make optional cash investments into the company at weekly, monthly or quarterly intervals for as little as $10 per investment.

By choosing to enroll in a company’s Dividend Reinvestment Plan, you will no longer receive cash dividends from the company. Rather, the company will send your dividends to its transfer agent who will use the funds to acquire additional shares in the company and then register and record those shares in your name. You will receive a statement from the transfer agent anytime there is activity in your account, whether that activity is the reinvestment of dividends or optional cash purchases of stock.

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