3. Dividends paid on account shares are automatically reinvested when declared, rather than paid to the holder.
5. DRIPs also typically offer holders the chance to have funds automatically taken from bank accounts at designated times to buy additional shares.
6. Investors can set dates to follow paydays, creating additional discipline that yields substantial sums.
8. If maintained over a long period, these discrepancies result in owning shares purchased at an average cost lower than the average of the prices on each purchase date. Hence the term "dollar cost averaging."
10. And there are value investing attributes of using DRIPs.
11. DRIPs and dollar cost averaging reduce the number of decisions an investor must make.
12. They are also attractive because few stocks meet properly defined value investing criteria.
13. Value investors monitor the fundamentals of the businesses and only take action to stop buying or to sell when preset fundamental factors have deteriorated to preset levels.