Dividend Reinvestment Plan
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A Dividend Reinvestment Plan or DRIP is a mechanism that some companies allow investors to automatically re-invest their cash dividends by purchasing shares including fractional shares on the dividend payable date, without paying brokerage commissions. DRIPs are generally best suited to long-term investors. Dividend reinvestment plans are operated directly the company (or their agent) and therefore there can be differences is how each company's DRIP operates. For example, some companies offer a discount incentive, typically about 5%, in their Dividend Reinvestment Plan. Companies may also offer their DRIP members the ability to make additional cash purchases, also known as a Systematic Investment Plan (or alternatively Share Purchase Plan).
Synthetic DRIPs may be offered by stock brokers in a limited number of stocks. Cash dividends from a stock in a synthetic DRIP are re-invested to the nearest whole share in that stock and the remaining cash credited to the investor's account. No commission is charged.
Canadian DRIPs
- Canadian Stock Transfer Company Inc.: Dividend Reinvestment Plans Overview
- The Stingy Investors' Drip List
- The DRiP Investing Resource Center
- Canadian Dividend Reinvestment Plans (DRIPs) Blog
