A dividend reinvestment plan (DRIP) is a long-term investment strategy in which investors reinvest their dividend payout into the company to buy more shares. If the company regularly pays dividends (and better if they increase them), this amount will increase over time as will your total return.
Plus, reinvesting dividends allows the power of compounding to be put to work. Owning more shares increases the amount of your dividend payment. And the larger the dividend payment the more shares you can add in addition to whatever capital you add. Over time, this creates a wealth-building cycle and it can smooth out times of stock price depreciation.