• FirefoxUpgrade to the new Firefox »
  • Education Center

    FEATURES

    DICTIONARIES
    Financial Glossary
    Bonds Glossary
    Options Glossary
    Personal Finance Glossary
    INVESTING 101
    Beginning Investing
    Bonds
    Charts
    Choosing a Broker
    Currencies
    DRIP & DSPP Plans
    Investment Clubs
    Mutual Funds
    Options
    Stocks
    PERSONAL FINANCE 101
    Banking
    Insurance
    Loans
    Real Estate
    Retirement
    Taxes

    There is a Difference: DRIPs and DSPs


    A DRIP is a dividend reinvestment plan that a company sponsors for existing shareholders. You must be a shareholder in order to participate in a company's DRIP, and any dividends paid by the company will automatically be reinvested in additional shares of stock in your account.

    A DSP is a direct stock purchase plan. Companies that have DSPs allow anyone to buy shares from the company directly. Following that initial purchase, the plan operates just like any dividend reinvestment plan (Some companies that don't pay dividends do have direct stock purchase plans, though.)

    The difference really comes down to how the initial shares are acquired, either directly from the company or from another source.