What dividend reinvestment plan means
A dividend reinvestment plan, often shortened to DRIP, lets eligible shareholders reinvest dividends into additional shares instead of receiving cash.
Example
Hypothetical example: if a 100 dividend is reinvested at a 20 share price before fees and rounding, it could purchase 5 additional shares in a simplified model.
Why it matters
DRIP scenarios help readers see how reinvestment assumptions can change a long-term model compared with taking dividends as cash.
Limitation or caveat
Actual DRIP rules can include eligibility limits, discounts, fees, rounding, tax effects, and plan suspensions. A model is not a forecast.
Related DividendTen pages
For more context, read DRIP explained and use DRIP calculator. You can also review the methodology and data verification policy.
Educational context only. This glossary entry is not investment, tax, legal, or personalized financial advice. Dividend terms help readers understand data fields, not decide whether any security is suitable.