A Dividend Reinvestment Plan (DRIP) automatically reinvests dividend payments to purchase more shares, generating compounding growth. Even modest dividends reinvested over decades can dramatically increase portfolio size.
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Pro Tip
DRIP works best in tax-advantaged accounts (IRA, 401k) where dividends aren't taxed each year.
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Did You Know?
Dividend reinvestment accounts for nearly 40% of the S&P 500's total return over the past 50 years according to Hartford Funds research.
References
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