Reinvesting Your Dividends
A DRIP takes your dividend cash and automatically buys more shares for you.
The idea
Some companies share a slice of their profits with the people who own shares. That payment is called a dividend, and it usually lands in your account as cash. You can spend that cash, or you can switch on a reinvestment plan — a DRIP — which automatically uses it to buy more shares of the same investment. More shares means the next dividend is worked out on a bigger position, though nothing is promised: companies can lower or stop dividends whenever they choose. 🔁
Words to know
- Dividend
- A payment some companies send to the people who own their shares.
- DRIP
- A setting that automatically uses your dividend cash to buy more shares.
- Share
- One small piece of a company that you can own.
- Fractional share
- A slice of a share, smaller than one whole share.
- Reinvest
- To put money you received straight back to work instead of spending it.
Try it — no account needed
True or false? Swipe each card the way you think it goes.
A dividend is money some companies pay to people who own their shares.
In the full lesson
- 1True or false
- 2Put it in order
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
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