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What is a Dividend Reinvestment Plan?

A Dividend Reinvestment Plan, referred to as DRIP, is a plan offered by corporations that allows investors to reinvest their dividends in full or partial shares of additional stock, on the dividend payment date.

Accessing a DRIP is typically a good long-term investment play - it allows for the investor to repurchase shares at a discount to the share price, and by accumulating additional shares over time increases equity ownership in the company.

Of course, electing to participate in a DRIP means not receiving dividends in cash.

Keywords: stocks, dividends, payment date, Dividend Reinvestment Plan (DRIP),