Dividend Reinvestment

Reinvesting dividends buys more shares, which pay more dividends, which buy more shares. Over decades, that loop can make a big difference. Here is how reinvestment plans work and what to watch for.

How reinvestment works

With a dividend reinvestment plan, each dividend automatically buys more shares, often including fractional shares, with no trading fee at most brokers. Your share count grows every quarter, and the next dividend is paid on more shares.

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