Treasury DRIP

Keep the dividends coming…drip, drip, DRIP.

A Treasury DRIP is a Dividend Reinvestment Plan that uses dividends from shares to buy more shares, straight from that company’s Treasury stock.

Treasury stock (or shares) are the shares that companies hold onto, i.e. they store them in their own treasury. From there, a company can decide to put more of those shares out on the open market for the public to buy (the float), or they can sell them to insider investors of the company (shares outstanding).

Treasury DRIPs sometimes come with a discount. Since you’re already a shareholder, they might cut you a few percentage points of a discount to encourage you to buy some more. You don’t even have to buy whole shares; dividends can be used to buy fractions of shares via Treasury DRIPs. Remember, you’re getting these directly from the company, not via a secondary market.

Treasury DRIPs can either be run by the company directly, or by a third-party brokerage. Each would potentially have different reinvestment timetables.

Keep those shares dripping in, please. We live on them in our old age.