Investing in Stocks With DRPs: Adding Yield to Your Returns

by Wayne A. Thorp, CFA

Investing In Stocks With DRPs: Adding Yield To Your Returns Splash image

Many investors get caught up in the daily fluctuations of stock prices and forget about the other element of stock investment returns: dividend income.

Total return consists of price appreciation and dividend income, and while prices go up and down, dividends tend to be steadier.

A conservative, low-cost approach to investing in dividend-paying stocks is with dividend reinvestment plans (DRPs or DRIPs); particularly those that sell initial shares directly to the public (direct purchase plans, or DPPs/DIPPs). Direct purchase plans allow investors to bypass a broker, and also often the commissions they charge. With these plans, dividend payments immediately go to work for you with little or no transaction costs. [See page 15 for more information.]

...To continue reading this article you must be registered with AAII.

Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
JOIN TODAY for just $29.
Register for FREE
to read this article and receive access to future AAII.com articles.

Log in
Already registered with AAII? Login to read the rest of this article.
  
Wayne A. Thorp, CFA is a vice president and senior financial analyst at AAII and editor of Computerized Investing. Follow him on Twitter at @AAII_CI.


Discussion

No comments have been added yet. Add your thoughts to the discussion!

You need to log in as a registered AAII user before commenting.
Create an account

Log In