What does DRIP in investing mean?

Asked 4 years ago

I'm researching different investment strategies and came across DRIP. While I have invested in dividend-paying stocks, I'm not sure where to move the money to next. I want to start reinvesting them, and this is where I got to the DRIP strategy. What is it, and how does it work?

Dividend reinvestment Dividend reinvestment program (drip)Dividend investing

Andrew Moran

Monday, October 18, 2021

A dividend reinvestment plan (DRIP) is one of the most efficient and successful long-term investment strategies you can employ.
DRIP is a program that lets investors reinvest their cash dividends to purchase extra shares on the dividend payment date.
For example, let's say you received a cash dividend of $250 for the second quarter for your ACME International shares. The cash will automatically be transferred to shares.
Now, it does depend on the brokerage firm when it comes to the minimum amount for DRIP. Some financial institutions maintain a monthly minimum of $100, while others do not have a minimum amount at all.