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DRIPs - How to Get Started with Dividend Reinvestment Programs

Updated on October 16, 2011

Dividend Reinvestment Programs are one of the best ways for you to build a position in a company at a very low cost. This occurs over a period of time, and most corporations offer this service. There are many advantages to DRIPs so its worth looking into.

Usually, there are little to no fees for shares purchased through a dividend reinvestment program, or plan. This is great for keeping costs down and help to increase your returns. You can have substantial returns over long periods of time.

You can purchase fractional shares with DRIPs. Through a program like this, you can purchase a percentage of shares and this is something that isn't possible through a broker.

There are options, like having regular withdrawals from your checking or other accounts to purchase shares. Some use it to help establish a dollar cost averaging program which is attractive to many people.

Its simple to purchase extra shares directly. Some people go with additional investments for as low as ten or twenty five dollars. Its easy to get started.

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How to Get Started with Dividend Reinvestment Programs

First, you will need to find out if the stocks you are interested in offers a dividend reinvestment program or not. Its easiest to just go to the company's website and look for a phone number to call. Another option may be to go to sites like www.equiserve.com.

The next thing to do will be to buy one share through your broker. Then you can request that he send you a stock certificate. Some people like to order a single certificate through special gift services. OneShare.com is one such place. That is all it takes to become eligible for participation.

Fill out all the appropriate paperwork that is provided to you from investor relations or Equiserve if that was the route you decide to go with. Its really pretty easy to do. Now the amount of shares that you own will increase as your dividends are reinvested. Its easy to see why DRIPs are so attractive to people, and perhaps it is something you want to look into yourself.   Make sure that you are as informed as you can be, especially regarding any possible fees.  That way there are no surprises.

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    • oceansnsunsets profile image
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      Paula 5 years ago from The Midwest, USA

      Thank you very much, Phoenix.

    • PhoenixV profile image

      PhoenixV 6 years ago from USA

      Excellent information on dividend reinvestment.