DRIP investing

Dividend reinvestment plan: A stock purchase plan that applies a shareholder’s dividends to the purchase of additional shares instead of sending the shareholder cash dividends. DRIPs without a direct purchase feature require that you own at least one share (and sometimes more) registered in your name. The advantages to investors who elect to participate in DRIPs are that dividend payments are put to work, transaction costs are eliminated or held to a minimum and the additional shares are purchased gradually over time—an easy-to-implement form of dollar-cost averaging. Many DRIPs also allow participants to make additional cash purchases of shares at little or no cost.