Dividend Reinvestment and Stock Purchase Plans

Summary

This practice note discusses dividend reinvestment plans (DRIPs) and dividend reinvestment and stock purchase plans (DRSPPs). A DRIP allows shareholders of a publicly held company to automatically reinvest their dividends into shares of the company’s stock (typically, common stock). A DRSPP, in addition to providing for automatic reinvestment of dividends, allows participants to purchase additional shares directly from the company with optional cash payments. DRSPPs are often referred to as direct stock purchase plans, or DSPPs, but because DSPPs also typically permit reinvestment of dividends, the term “DRSPP” when used in this practice note refers to DSPPs as well.