Buying stocks directly from companies eliminates broker transaction fees
|ExxonMobil • Caterpillar • Intel|
|-you save money-|
Some companies have adopted the Direct Stock Plan (DSP) which allows individuals to buy and sell shares directly through the company, bypassing brokerage firms and their fees. In many cases you can have the dividends you receive from the company automatically reinvested into more shares through a Dividend Reinvestment Plan (DRIP).
Direct Stock Plans (DSP): Some companies allow you to purchase and sell stock directly through them without having to pay commissions to a broker, although you may have to pay a small fee for this service.
Some companies require that you already own stock (at least one share) in the company or are employed by the company before you can participate in their DSP. You may be able to buy stock by investing fractional dollar amounts rather than having to pay for an entire share. In some cases you could have an account debited on a regular basis to make investments in the plan. Some plans require a minimum amount of investment or require you to maintain specific minimums in your account.
Each company that has DSP will explain on their website all the requirements and what amount they charge for the service- the fee charged is usually a fraction of the cost a broker would charge.
DSP plans will not allow you to buy or sell your securities at a specific price- they batch transactions and buy and sell shares at established periods- weekly or monthly and normally at an average market price.
Dividend Reinvestment Plans (DRIP):Dividend reinvestment plans let you take advantage of reinvesting your dividend back into shares of the company instead of receiving cash.
The rules and restrictions in these plans vary depending on the kind of plan and the company offering the plan. Before you decide on DSP, read the company's disclosure information (prospectus) to learn how its particular plan works. The plan will tell you how to enroll, the number of shares needed to open an account, any charges that may apply, and the minimum or maximum you can buy or sell, the dates when you can invest, and how to withdraw, transfer, or sell your shares.
Most of the companies that have DSP have Internet sites that can provide you with information about their plans or tell you who to contact for more information. Some companies have assigned their transfer agent to administer the DSP.
There are literally hundreds of well known companies that have DSP and DRIP investing plans that will allow the individual investor to acquire their stock and to reinvest dividends.
To get you started, we have identified a few well known companies that have DSP plans. These are not recommendations to buy these stocks, but simply to acquaint you with the process of DSP and DRIP programs.
ExxonMobilShareholder Investment Program Allows you to buy and sell their stock and to reinvest dividends automatically.
Intelstock purchase program is a DRIP that allows you to buy Intel shares if you have at lease one share to begin with. Their DRIP program allows you to reinvest dividends back into company shares.
CaterpillarDirect Stock Purchase Program allows shareholders of record and new investors to acquire their common stock.
With a little research on your part, you can find these companies on the Internet by searching for: direct stock purchase plans investor relations.
DSP is a great way to invest in NYSE and NASDAQ companies and save on transaction fees...
If you're a beginner in the stock market and would like a quick "101" on how to invest in stocks and funds, check out the related article on Introduction to investing for beginners.