Definition of a Dividend Reinvestment Plan
A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. A DRIP is an excellent way to increase the value of your investment. Most DRIPs allow you to buy shares commission free and at a significant discount to the current share price. Most DRIPS don’t allow reinvestments much lower than $10.
This term is sometimes abbreviated as “DRP”.