How Drip Investing Can Affect your Long Term ProfitDrip Investing or dividend reinvestment plan investing can be many times more profitable than just simply buying a stock and holding onto it for the long term. What happens with this plan is that you choose to take any dividends that you receive and reinvest them back into the company. Over the long term this strategy can work very well. For instance say you have $10,000 and want to invest it into 1 stock. Over the next 10 years the stock makes a return around 10% annually and pays out 5% annually in dividends. If you would have invested in the stock without reinvesting the dividends your $10,000 would be worth $29,636.69 after 10 years. If you had reinvested the dividends your $10,000 would have turned into $40,455.58 during the same time frame. The longer the time period the larger the gap becomes. 
So now that we know that drip investments outperform simply buying and holding how do you take part in it? The first step is simply owning the stock. Once you have a few shares of the company you may contact the company directly through their shareholder relationship department, and ask to fill out a drip enrollment plan.
If you own the stock in a brokerage account then it might be under a street name and you might not be recognized as a shareholder. So you would need to contact your broker and have them issue the stock in your name first. You also need to own a certain amount of shares to qualify for the drip program, but luckily this number is normally only 1 share. You can visit http://www.directinvesting.com to find out how many shares you need to own in order to qualify for each company. The downside to having a dividend reinvestment plan is that although you do not receive the dividends you still have to pay taxes on them. So make sure you are prepared for that, especially if you have a large portfolio. Return From Drip Investing to Fundamental Analysis
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