DRIP (Dividend Reinvestment Plan) automatically uses your cash dividends to buy additional shares instead of paying them out. This creates a powerful self-compounding cycle:
- Receive dividend → Automatically buy more shares
- More shares → Larger dividend next payment
- Larger dividend → Even more shares purchased
- Repeat for 10–30 years → Exponential wealth growth
Example: $10,000 invested at 4% yield with 6% growth and DRIP for 20 years grows to approximately $50,000+ versus ~$32,000 without reinvestment. Model your own DRIP scenario with the US Stock Compound Interest.