I normally do not like talking about specific stocks or mutual funds that I own because I am not a financial planner, stock analyst, or financial professional. I am a writer who happens to have a hefty educational background in finance, both personal and corporate. But, I wanted to share with you three stocks that I own through Dividend Reinvestment Plans, which are also more commonly referred to as DRIPs, that are very easy for the beginning investor to own.
What Is a Dividend Reinvestment Plan?
Just as a quick refresher on dividend reinvestment plans. I have talked about them here on the blog before. A dividend reinvestment plan is basically an equity investment option offered directly from the company that is providing the shares of stock. The name of the investment comes from how the company’s dividends are reinvested into new shares of the company. The benefit of a DRIP is that very few companies charge a commission or if they do, it is very small. So, the cost of entry into owning individual shares of stock is very small.
Stock That I Own In DRIPs
I bought these stocks a certain times and at certain share prices that were beneficial and meaningful to me. If you are just venturing into investing in the stock market, probably the best stocks or DRIP plans to own are:
• Coca-Cola (KO)
• Dr. Pepper, Snapple Group (DPS)
• McDonald’s (MCD)
Dividend Reinvestment Plan Administrators
Most large companies that offer dividend reinvestment plans hire an outside investment firm to manage their program for them. You can find out exactly which firm handles the company you are looking for by doing a little digging on the company’s investor relations page of their website. For example, if you wanted to find out information about Dr. Pepper’s DRIP program, you can find the details on the Dr. Pepper Snapple Group’s website and their investor center page, then click on “shareowner services”, and finally “dividend reinvestment/direct stock purchase”. It does take some digging sometimes, but you should be able to find links to a company’s DRIP plan if they have one in their investor relations section of their website. Computershare handles the DRIP program for all three of the companies that I have listed above. There are many DRIP plan administrators out there, but it just so happens that the three in this article are all run by Computershare.
The Dr. Pepper Snapple Group DRIP plan has a lot of features and allows the investor to reinvest dividends, receive cash dividends electronically or by check, sell shares daily, buy shares through recurring monthly purchases with an automatic investment feature, receive quarterly account statements, purchase shares online, and manage your account online at www.computershare.com/investor. Many programs have a requirement that an investor own at least one share in his or her name instead of in “street name” through a broker which is more common to standard investors. But, Dr. Pepper’s DRIP program allows you to purchase initial shares through the program, as a new investor.
Be sure to review the prospectus so you are well-versed about the administration of a particular DRIP program. DRIPs are excellent programs for beginners, seasoned investors, and anyone who is beginning to save for retirement.
(photo credit: Shutterstock)