Example of how a DRIP works
A DRIP is a very simple program, no matter who is offering it. First, you purchase a stock in a company you believe in as a long-term asset. Next, when that company issues its dividends, the money will be automatically used to buy more shares of its stock.
So, if you bought XYZ, Inc. for $5,000 and got $250 in dividends (5%) at the end of the first quarter, you'd have $5,250 in XYZ, Inc. When the second quarter rolls around, if the dividend is unchanged (still 5%), you'll get $262.50 more to add in, making your value $5,512.50 at the end of the second quarter.