Dividend Reinvestment Plan. An investment plan offered by some corporations enabling shareholders to automatically reinvest cash dividends and capital gains distributions, thereby accumulating more stock without paying brokerage commissions. Many DRIPs also allow the investment of additional cash from the shareholder, known as an optional cash purchase. Unlike with a Direct Stock Purchase Plan, with a DRIP the investor must purchase the first share in the company through a brokerage. After that, the company will take whatever dividends it would normally send as a check and instead it will reinvest them to purchase more shares in the company for you, all without charging a commission.
The only drawback is that the investor has no control over when his/her money from the dividends is used to purchase new stock in the company, which means he/she might be buying new shares at sub-optimal times. also called Dividend Reinvestment Program.

Use DRIP in a sentence

You should try and come up with a good DRIP to help you earn even more money over the long run.

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Jerry used his umbrella when he went out in the rain to check his mail. The umbrella did it's job and not a drip of rain got on him.

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I'm very happy with this new DRIP plan offered by my company since brokerage commissions often prevented me from wanting to procure more of the stock.

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super DRIP direct investment