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Morningstar, Inc. Commentaries

Smarter CEF Investing Starts With a DRIP

May 23, 2014
Click here to access Smarter CEF Investing Starts With a DRIP

A version of this article was published on Feb. 3, 2012.

A Dividend Reinvestment Plan, or DRIP, allows current investors to reinvest their fund's distributions at an advantageous price instead of receiving cash. Such programs are offered by most closed-end funds, or CEFs, though we've been told by many fund firm insiders that very few shareholder take advantage of this option. Reinvesting distributions can, over time, significantly benefit long-term investors' returns.

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