DRIP: Dividend Reinvestment Plan Resources
Description
This article is from the Investing Articles: Mutual Funds series.
DRIP: Dividend Reinvestment Plan Resources
What is the difference between a Direct Purchase Plan (DPP) and a Dividend Reinvestment Plan (DRIP)? Both are no-load stocks and in both cases the individual investor can buy stock directly from the company without going through a broker. However, to buy a DRIP, you need to already own stock to reinvest your dividend as more stock. With a DPP, you can be a first-time buyer. Of course most companies with a DPP also offer a DRIP. (Though there are some companies with a DRIP who do not yet have a DPP.)
At one time, DPPs were offered mainly by public utilities. This is changing rapidly since the number of companies offering stock directly to the public is doubling about every six months. Public companies are, at least in part, motivated to create DPPs to offset the increasing number of stocks being held in "street name" rather than by registered holders. At the same time, a recent SEC ruling makes it easier for companies to sell stock directly to the public.
You now also see more mention of Direct Public Offerings (DPOs). Until recently, offering IPO stock directly to the public worked best for local companies who enjoy good word-of-mouth publicity in the community. With the growth of the Internet of course, however, the community has expanded.
Of course these plans are popular with investors wishing to avoid
brokers' fees. However, David Halseth, of Halseth Capital Management,
cautions, "Don't let the tail wag the dog by deciding to buy stock
based on whether or not the company offers direct purchase. You should
buy based on your investment strategy and research. But if you were
going to buy the stock
anyway, of course purchase directly from the
company."
More Information:
- Benefits of Dividend Reinvestment Plans. (http://www.mreic.com/) By Eugene W. Landy, President, Monmouth Real Estate Investment Corporation.
- Create and Manage Your Own Mutual Fund. By Vita Nelson and Donald J. Korn. A guide to developing a portfolio using dividend reinvestment plans, from the editor of The Moneypaper. List Price: $15.95, Amazon Price: $12.76.
- Buying Stocks Without A Broker. By Charles Carlson. The penultimate guide to DRIP investing. Starting with $10 to $25 a month, investors can buy stock in many of America's leading public companies, and this book will tell you how. Buying Stocks Without a Broker lists over 1,000 DRIPs with details on each plan, as well as model DRIP portfolios and corporate profiles. The book outlines the many ways of getting started in dividend reinvestment plans, including brokers and other DRIP-starter programs. Carlson's demonstrates how DRIP investing can lead to long-term financial success for individual investors who don't have thousands of dollars to pour into stocks all at once. Order here and save 20% from Amazon.com. List Price: $17.95, Amazon Price: $14.36.
- DRIP Investor. (http://www.dripinvestor.com) The latest news on Dividend Reinvestment Plans and No-Load Stocks and their many commission free investment options. Weekly commentary is provided by Charles Carlson, Editor of DRIP Investor newsletter, and the leading DRIP expert. Model DRIP portfolios, sample issues of the newsletter, and frequently asked questions about dividend reinvestment plans and no-load stocks.
- Free Lunch on Wall Street: Perks, Freebies, and Giveaways for Investors. By Charles Carlson. Who says small investors never get a break? Here's a wealth of mouth-watering perks they can all enjoy--from the bestselling author of Buying Stocks Without a Broker. Carlson identifies the leaders of the perks and tells how to buy stocks at a discount, build clout, cut out brokers, and more. Order here and save 20% from Amazon.com. List Price: $14.95, Amazon Price: $11.96.
- Julie and Debbie's Guide to Getting Rich on Just $10 a Week: How We're Making a Fortune-And You Can Too-Using Dividend Re-Investment Plans By Deborah Rosen Barker and Julie Behr Zimmerman. Designed for first-time investors and anyone who ever thought investing was too complicated, this easy-to-follow guide--in the tradition of The Beardstown Ladies' Commonsense Investment Guide--provides everything you need to know to start investing without a broker. Order here and save 20% from Amazon.com. List Price: $9.95, Amazon Price: $7.96.
- The Motley Fool. (http://www.fool.com) Information about DRIPs and a model DRIP portfolio, are offered by the Fools.
- National Association of Investors Corporation. (http://www.better-investing.org) NAIC's Low Cost Investment Plan allows members to buy a share of 145 companies to get started in their DRPs, for the purchase price and a small service charge.
- No-Load Stocks: How to Buy Your First Share and Every Share Directly from the Company--With No Brokers Fee. By Charles Carlson. Complete information on more than 100 companies offering direct investment programs, including reports on every no-load stock complete with phone numbers, business profiles, financial information and exclusive performance ratings. Order here and save 20% from Amazon.com. List Price: $16.95, Amazon Price: $13.56.
- No-Load Stock Insider. (http://www.noloadstocks.com) The only newsletter devoted exclusively to buying your first share -- and every share -- of stock directly, without a broker. Includes a direct of no-load stocks, and a free E-Mail Alert Service to have information on new no-load stocks e-mailed to you instantly!
- Standard & Poor's 100 Best Dividend-Paying Stocks. High dividends are one of the key factors sought by investors when judging the value of a stock. In this new guide, Standard & Poor's, the world's most reliable name in investing, highlights the 100 most profitable dividend-generators--complete with easy-to-find, easy-to-understand data compiled for investors at all levels. Order here and save 20% from Amazon.com. List Price: $19.95, Amazon Price: $15.96.
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