What are Dividends of stock?

Dividends are payments made by a corporation to its shareholders. This is usaually done quarterly(every three months). It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend.

What are Dividend Reinvestment Plans?

Dividend Reinvestment Program (DRIP, DRP, DSP), besides being a mouthfull, is a way to buy stock directly from a company. The name comes from the fact they use the paid diviend to buy more of the same stock. This way investors can start investing small early on and your investment will grow over time.