DRIP

DRIPS can make your $ overflow!

 
What the heck is a DRIP!?!  In investing a DRIP is not a problem like a leaky faucet it is.  A DRIP stands for 'dividend reinvestment plan', and is defined as:  A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. 

This type of plan lets you take the money that you make from your dividend payments and reinvest it in to more stock.  Most good companies who offer dividends will offer a DRIP program and you should be able to sign up for a DRIP through your brokerage.  A DRIP will allow you to buy more stock automatically and build your position with your dividend payments automatically.  How maddening would it be, for example if you received a dividend payment for $11.22 for one quarter?  It is much better to use a DRIP and have the money automatically reinvested in the stock when you are trying to build a position. 

If you are an income investor who relies on your dividend payments to pay bills and you have a substantial position in a stock then obviously DRIPs aren't for you!  If you are a savvy investor who is trying to build a strong position in high quality dividend yielding stocks, make sure that you incorporate DRIP.