DIVIDEND-REINVESTMENT PLAN
dividend-reinvestment plan.A stock-purchase program that allows investors to reinvest their
dividends, and perhaps convert additional voluntary payments, into shares of the entity’s common
stock, usu. with no sales charge, and sometimes at a discount from the stock’s market price. •
Although the investor never receives the cash, it is still treated as income to the investor. An
investor may be allowed to make optional cash purchases of additional stock. — Abbr. DRIP;
brokerage-run dividend-reinvestment plan.A formal or informal program managed by a
brokerage and allowing shareholders to reinvest dividends in a portfolio, often at no cost. •
Brokerage-run plans are usu. limited to dividend reinvestment.
company-run dividend-reinvestment plan.A program operated by a corporation for its own
shareholders. • Company-run plans may offer additional features such as IRAs.
transfer-agent-run dividend-reinvestment plan.A program administered by a financial
institution for several companies. • An investor can participate in more than one DRIP program
simultaneously and also make additional cash investments in multiple companies. [Blacks Law 8th]