DRiP Primer

How to Get Started with DRiPs

If you’ve made if this far in our DRiP Primer, you may be interested in learning how to get started investing with DRiPs. Here is a step-by-step guide to the process.

How to Buy Your First Share: Many Dividend Reinvestment Plans require that an enrollee be a current shareholder with at least one share registered in his or her name. There are several ways in which you can purchase your first share, including: 1) a company’s direct purchase option; 2) a discount stockbroker; and 3) our First Share Program for DRiP investors.

1. o Direct Enrollment Option: The direct enrollment option offered by many company’s transfer agents is probably the most convenient way to get started investing with DRiPs. However, in most cases you will be required to make a minimum initial investment of up to $1,000 or more, plus pay an enrollment fee of $15 or more. Depending upon the particular plan, you may be able to spread the initial investment out over a period of time, but many require the entire initial investment upfront.
2. o Discount Broker: A discount brokerage such a E*Trade will require an initial account balance of $500 or more, a trading commission of $9.99 per trade and a $75 stock certificate request fee. The stock certificate request fee is unavoidable as your share will be required to be registered in your name before you will be able to enroll in a company’s dividend reinvestment plan. If your shares are held in a brokerage account, the chances are they are registered in “street name” and will have to be transferred into your name. The $75 fee would be the cost of transferring that share into your name.
3. o First Share Program: With our program, you can purchase one share of stock and have it registered into your name for the stock price plus as little as $5 (First Share Pro members). While the time required to transfer the shares into your name will vary depending upon the company selected, our program is typically the fastest and cheapest way to acquire your first share of stock in a company. Read more about how our program works HERE.

Determine your Strategy: We have already discussed the most common investing strategies for DRiP investors HERE. It is important that you know what you want to accomplish and how you will go about accomplishing it before you start investing. What is your investing horizon? How much risk are you willing to take? How many DRiPs do you want to buy? When will you sell? All of these are important questions and should be considered carefully before deciding to begin investing with DRiPs and before selecting the companies in which you want to invest.

Choose Companies: The companies that you will include in your DRiP portfolio will be one of your most important decisions. Making good, well-informed decisions about which DRiPs to invest in can save you a lot of time and effort later. You should do as much research on the company as possible, including researching the company’s website and earnings releases, reading the company’s annual report and researching the company’s DRiP plan. For the companies offered in the First Share Program for DRiP investors, we have created company profile pages with summaries of the companies’ operations, dividend history and DRiP fees and requirements. You should also read through the company’s DRiP prospectus to be sure that you understand how it works.

You can find each company’s DRiP prospectus on the company’s profile page HERE!.

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