The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

What Is A Dividend Reinvestment Plan ?

A Dividend reinvestment plan is a automatic reinvestment of shareholder dividends in more shares of a company's stock. Generally, this occurs without commission fees. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long term using "dollar cost averaging". The Dividend reinvestment plan is usually administered by the company without charges to the shareholder.

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