A Dividend Reinvestment Plan (DRIP) offered by a company and one offered by a brokerage both allow investors to reinvest dividends into additional shares, but they differ in structure and features.

A company-sponsored DRIP is directly managed by the company or its transfer agent. These plans often enable shareholders to reinvest dividends with little to no fees and sometimes offer shares at a discounted price. Many company-sponsored DRIPs allow the purchase of fractional shares, enabling every dollar of dividends to be reinvested. Investors typically need to hold shares directly with the company to enrol in these plans, which may require paperwork and longer processing times.

A brokerage-sponsored DRIP, on the other hand, is managed through an investor’s brokerage account. These plans provide convenience, as all eligible stocks held in the account can be enrolled in a DRIP with minimal effort. Brokerage DRIPs usually offer automatic reinvestment of dividends into fractional shares, but they rarely provide discounted share prices. Additionally, brokerages may charge fees, depending on the platform.

The primary difference lies in accessibility and cost. Company-sponsored DRIPs may offer financial advantages, but brokerage DRIPs simplify portfolio management. Choosing between the two depends on the investor’s priorities, such as cost savings, ease of use, and the scope of available investments.