Income
DRIP
Definition
Dividend Reinvestment Plan — a program that automatically reinvests cash dividends into additional shares of the underlying stock. DRIPs leverage compound growth and are available through most brokerages.
Related Terms
Compound Interest
Interest calculated on both the initial principal and all accumulated interest from previous periods. Often called the "eighth wonder of the world," compound interest is the primary wealth-building mechanism for long-term investors.
Dividend
A distribution of a company's earnings to shareholders, typically paid quarterly. Dividends provide regular income and are a sign of financial health. The average S&P 500 dividend yield is around 1.5-2%.
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