So, What is a DRIP?

DRIP, or Dividend Reinvestment Plan, is a program run by a publicly-traded company. Unlike most investment plans, DRIP does not send dividend checks to shareholders enrolled in a company's DRIP. Instead, the company reinvests those dividends by purchasing additional (or fractional) shares in the shareholder's name. You can buy shares of certain companies in the S&P 500 (America's top 500 corporations) with as little as $10.00 and essentially investing on a regular basis will lead to a sizeable portfolio without paying a single commission to a stockbroker by participating in a company's DRIP. You usually need only one share to enroll in a company's DRIP plan, and most of the time the company will reinvest a shareholder's dividends without a fee or commission. Finally, the company purchases the shares and issues statements that detail the shareholder's account.