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DRIPs or DRPs are Dividend Reinvestment Plans through which companies allow their shareholders to reinvest dividends and purchase shares without a broker (direct stock purchase plans). The money you save on brokerage commissions is extra money for you to invest in your portfolio.
For years many corporations have offered shareholders the opportunity to reinvest dividends and purchase shares without having to buy through a broker or pay brokerage commissions. Because of SEC rules these companies may not advertise these programs to non-shareholders, unless the company goes through the cumbersome and expensive process of filing with the SEC for permission to sell shares to non-shareholders
Brokers rarely tell clients about the programs because the programs provide no compensation for brokers.
These plans allow shareholders to invest amounts from as little as $10 to as much as $120,000, without paying brokerage commissions. As a shareholder you may participate in a company's plan by sending the amount you desire to invest to the company's DRP administrator. The administrator purchases shares on your behalf on the investment date specified by the company's plan and holds the shares in an account for you. The funds you invest will be used to purchase full and fractional shares of the company.
Most companies require that you own a minimum of one share to participate in their direct stock purchase programs. The First Share Program is a simple low-cost service which allows members to purchase the initial share to qualify for each company's program
DPP “Direct Purchase Program” refers to the provisions of a company’s DRIP which allows shareholders to purchase additional shares of stock directly from the company via its transfer agent, in addition to having dividends reinvested automatically. In the early days of DRIPs, an investor had to be a registered shareholder of one or more shares of the company’s stock before the investor could enroll in a company’s DRIP. Today, companies offer DPPs through their transfer agents that allow investors to participate in a company’s DRIP program without previously owning one or more shares. These options, however, can become cost prohibitive as most have minimum initial investments of $200 or more plus an enrollment fee. Many find that it is much more cost effective to become a shareholder first and then enroll in the company’s DRIP/DPP on their own.
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.
We believe that our program is superior to your other options and here’s why:
|First Share Program
|Company Direct Enrollment
|Minimum Initial Invstment/Account Balance||None||$200+||$500|
|Trading Fee/Referral Fee2||$10||$15+||$9.99|
2. FirstShare.com sellers may charge an additional fee for transfer costs
Once you have purchased your first share and have completed the transfer process to register the share in your name, it’s time to establish your DRIP account. For this step you will need to contact the company’s transfer agent, either by mail, phone or by visiting the transfer agent’s website. Our company profile pages display the mailing address and phone number for each company’s transfer agent. Most users, however, will find it easier to sign up for the company’s DRIP plan through the transfer agent’s website. Below are the website links for the four largest transfer agents.
American Stock Transfer & Trust Company
Some companies, such as The Walt Disney Company, act as their own transfer agents and you’ll need to visit that company’s website directly to establish a DRIP account.