DRIP (dividend reinvestment plan)
Automatically using dividends to buy more shares.
A DRIP takes every dividend you receive and immediately uses it to buy more of the same stock or fund.
Why it matters
Reinvested dividends compound quietly in the background. Over long periods, a large share of the stock market's total return has come from reinvested dividends rather than price gains alone.
Most brokers let you switch on dividend reinvestment for your whole account or for each holding, usually for free.
Taxes
In a taxable account, reinvested dividends are still taxable in the year you receive them, even though you never saw the cash.