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Dividend reinvestment plan

• Abbreviated DRP. Automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the Long term using dollar cost averaging. The DRP is usually administered by the company without charges to the holder.

• Abbreviated DRIP or DRP. Plan offered by many corporations for the reinvestment of cash dividends by purchasing additional shares or fractional shares on the dividend payment date, occasionally at a discount from market price. Many DRIPs also allow the investment of additional cash from the shareholder, known as an Optional Cash Payment or Optional Cash Purchase (OCP). The DRIP is usually administered by the company without charges or only nominal fees to the participants, and many allow additional purchases of as little as $10.

• Plans that enable shareholders to use dividends received on the firm's shares to acquire additional full or fractional shares at no transaction (brokerage) cost.

 
 

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 Embedded terms in definition
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Cash
Discount
Dividend reinvestment
Dividends
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Dollar cost averaging
Drip
Drp
Long term
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Market
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Purchase
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Shareholders
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Stock
Without
 
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