The Case for Using a Dividend Reinvestment Plan

A well known investment vehicle for dividend investors is the dividend reinvestment plan (DRIP). It is debated frequently on Seeking Alpha, however, whether or not this is the best methodology for growing dividend portfolios. In this article we will look at the reasons why it is a sound strategy and good tool for investors.DRIP Characteristics Very low fees Automatic reinvesting of dividends Easy automatic investing / contributions Who Should Use A DRIPA DRIP is a great tool for are investors looking to be passive in their investing style but still build positions of individual stocks. Most individual investors use passive vehicles like 401(k) plans and because of the popularity of diversification, own baskets of stocks and/or mutual funds.For someone looking to get into specific stock ownership, a DRIP is a great way to do it. A relatively new investor can ease into individual stocks by contributing a... Read more