You will also be signed up to receive our monthly stock special. You can unsubscribe at any time. We do not share your email with anyone. Please login below, for login help click here User or Subscriber ID:.
As always, good luck, Vita Nelson. How can investing in DRIPs help me? Succeed by dollar-cost averaging The concept is simple. Getting started is easier than you think You may think that creating a stock portfolio is a daunting task--one you might better leave to the professionals. Dollar-cost averaging : By automatically reinvesting dividends you will inherently practice dollar-cost averaging.
Dollar-cost averaging involves the recurring purchase of an investment, rather than investing in one lump sum. Purchasing additional shares at regular intervals can help lower your total average purchase price. Immediate reinvestment : Because the dividends are automatically reinvested into additional shares, DRIPs can reduce the chance that you leave the cash sitting uninvested if you forget to manually do it. Cash left uninvested in an account can reduce returns over time.
Lower commissions : If you have a DRIP set up through a brokerage firm, the firm may eliminate the commission on most reinvested dividends. This will mean more of your cash is invested into additional shares. However, not all brokerage firms provide DRIPs without commission, so make sure to check yours.
Otherwise, you may be forced to sell some of your shares to get the cash anyway. Lack of diversification : If you set up a DRIP plan for one stock, you will potentially accumulate a significant amount of that particular stock over time, reduce your diversification, and leave you with more risk than is necessary. Make sure to periodically check your portfolio and rebalance. Normally, you can enroll in a DRIP through your brokerage firm when you purchase an investment by logging into your online account and selecting the option to have dividends reinvested.
Or, you can call your advisor if you work with one and have them walk you through it. Some companies offer their own DRIPs, too. Your Money.
Personal Finance. Your Practice. Popular Courses. Stocks Dividend Stocks. Dividend Stocks Guide to Dividend Investing. What Is a Drip? Key Takeaways A DRIP is a dividend reinvestment plan whereby cash dividends are reinvested to purchase more stock in the company. DRIPs use a technique called dollar-cost averaging intended to average out the price at which you buy stock as it moves up or down. DRIPs help investors accumulate additional shares at a lower cost since there are no commissions or brokerage fees.
Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors.
A dividend reinvestment plan DRIP is a program that allows investors to reinvest their cash dividends into additional shares or fractional shares of the underlying stock on the dividend payment date. Although the term can apply to any automatic reinvestment arrangement set up through a brokerage or investment company, it generally refers to a formal program offered by a publicly traded corporation to existing shareholders. Around companies and closed-end funds currently do so.
Normally, when dividends are paid, they are received by shareholders as a check or a direct deposit into their bank account.
0コメント