A guide to dividend reinvestment plans
Want to buy into the stock market but you don't have enough money to buy in 100 shares at a time? While deep discount brokers have made buying into stocks feasible, even if it's just a few shares at a time, it's hard to beat the allure of direct investing.
Dividend Reinvestment Plans -- or DRiPs -- allow investors to buy into stocks on their own terms. Whether it's just a matter of having your dividends reinvested to buy more shares or granting you the ability to make a cash contribution that goes to acquire additional shares, there are many reasons to love a DRIP -- like the ability to dollar cost average.
Some companies, No-Load Stocks if you will, allow you to buy that first share directly from them.
Not every public company offers a DRIP. Some DRIP programs are ripe with fees while others are completely free of fees and even give you a discount on the shares you buy with reinvested dividends. Some DRIPs come from companies that don't even offer dividends.
There is a lot to learn about these investing vehicles. Naturally your stock broker doesn't want you to know that there is a way for you to cut out the middleman and deal directly with the stock and its transfer agent. Feel free to explore this site and also check out the many books that have written on the subject.