Dividend reinvestment programs (DRIPs) occur when large companies allow stockholders to reinvest their dividends by using them to purchase additional shares. In most cases, if your dividend is less than the value of one share of the stock, you are able to purchase less than one full share. If you have a small amount of money to invest in a particular stock, DRIPs can let you grow your stake over time without having to pay brokerage commission son the purchase of additional shares.

The downside to DRIPs is that while you won't receive dividends as cash, you will be taxed on the dividends received in the program. The company operating the DRIP program will also frequently charge administrative fees — though these are usually less than brokerage commissions if you have a small stake in the company.