CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What iscommon stock dividends and DRIPs?

Common stock dividends and DRIP

Common stock dividends and DRIPs are two ways companies can pay profit to shareholders without using cash. DRIP stands for “dividend reinvestment plan” where an investor can reinvest their dividends, putting them towards buying more stock.

Where have you heard aboutcommon stock dividends and DRIPs?

Typically, it’s bigger companies that distribute common stock dividends, however DRIPs are widely available where common stock is already issued. Even where a company doesn’t offer DRIPs directly, they can be arranged through a brokerage firm.

What you need to know aboutcommon stock dividends and DRIPs.

Common stock dividends have many benefits for investors, as they aren’t taxed until the point that they’re sold. If you don’t need to receive a return straightaway they’re a good option, however you should be wary of investing in a company that doesn’t have enough capital in the business to distribute cash dividends

Dividend reinvestment plans are more beneficial to a company than common stock dividends as they provide direct access to low-cost investment.

They’re also good for investors as they tend to be offered at a discounted share price and are commission free. DRIPs are fairly unique as they’re not limited to whole shares; shareholders can purchase fractional shares if the dividend doesn’t cover the cost of a full share.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading