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The Pocket Idiot's Guide™ To Direct Stock Investing by Lita Epstein, Douglas Gerlach

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What Is a DRIP?

A DRIP, which stands for dividend reinvestment plan, allows you to reinvest any dividends you earn from a company in buying more shares of that company—without paying any commissions for buying the new shares. Do be careful though, because some companies are charging for reinvesting dividends, so check your fees carefully.
Publicly traded companies run DRIP programs for their shareholders. Instead of sending dividend checks to shareholders enrolled in a company’s DRIP, the company reinvests those dividends by purchasing additional shares (or fractional shares) in the shareholder’s name.
In some cases, you only need to buy one share of a stock before you can enroll in a company’s DRIP; other companies may require you to buy ...

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