Dividend Reinvestment Plan (DRIP)

A dividend reinvestment plan (DRIP) automatically reinvests the dividends earned by investors into more stocks of the same company, often at a discounted rate. DRIPs offer the potential for exponential earnings as the reinvested dividends generate more stock, leading to additional dividends and so on. However, investors usually have the choice to reinvest their dividends or cash them out before the DRIP starts.