DIVIDEND-REINVESTMENT PLAN

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. ¡ª Abbr. DRIP; DRP.

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.


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Carl, Chinese legal translator, specializes in translating legal documents pertaining to complex business disputes.