What are DRIPs?

DRIPs? They are Dividend ReInvestment Plans - accounts usually sponsored by publicly traded companies to promote long term stock ownership.

DRIPs often offer lower ownership costs for long term stockholders, however it totally depends on the plan. Each company offers their own plan. Brokerages may come and go, but if your stock isn't worthless there is a very high probably the DRIP account for your stock will still exist.

Here are some previous articles that dive into DRIPs:

My DRIP Strategy
List of DRIPS I participate in
Investing in Merck?
List of DRIPS
The Almost Definitive Guide to using Company-Sponsored DRIPs or ShareBuilder Accounts
Drip Investing web site with analysis on many popular dividend reinvestment programs

Tags: sharebuilder,

Related in DRIPs:

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Comments (7)

This is a very good list of DRIP information. I need to spend some time to do some research.

Thanks.

Posted by Sun | October 27, 2006 10:29 AM

Never knew that's what they were called. I've got these set up on the few stocks that I own. Its always nice to see that the number of shares I own has gone up.

Posted by Matt | October 27, 2006 2:32 PM

DRIPs used to be popular when the brokerage commission was high because they allow you to buy additional shares without a commission. Now the brokerage commission has become trivial plus brokerage firms like Fidelity reinvests dividends for you into fractional shares for free, there is less need for investing in separate DRIPs any more.

Posted by Finance Buff | October 27, 2006 7:11 PM

That's a nice collection of articles you have got there. Sharebuilder gives an option of "automatically reinvest dividend" ...when you say DRIP that is what you mean right? Sharebuilder sets it as default for all stocks you buy through them, doesn't it?. Sorry if I sound like a moron, its probably because I am a moron in this area.

I am going to keep coming back and read all your previous posts on investing and keep asking questions. :)

Posted by Golbguru | October 27, 2006 9:20 PM

Good point - using the term DRIP is confusing - brokerages like Sharebuilder offer DRIPs and there are company sponsered DRIPs. Most of my discussion have been about company sponsored DRIPs.

Finance Buff - I agree, brokerage costs have come down a long way in the last 10 years or so. However, I still think company sponsored DRIPs still offer some attractive benefits - however its all in the particular features of each company sponsored DRIP.

Posted by 2 million | October 29, 2006 5:59 PM

Nice site. Very inspiring.

I am now participating in my employers deferred compensation plan. I am investing 11% of my pay. If my calculations are correct I should be at 1 million before retirement, and of course there is social security (if it exist then) and my pension.

How old are you if you don't mind me asking?

Now that you are engaged (congrats), do you feel the 2mil will be sufficient for you and your future wife?

Posted by DD | October 29, 2006 8:58 PM

Check out the About Me page for more on me, but I am currently 30.

As to whether 2mill be enough for the both of us, the short answer is - I think so. However, my fiancee and I still need to "marge" or financial goals - I will be discussing this more in the future.

Posted by 2million | October 29, 2006 9:35 PM