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DRPs explained

September 30th, 2005 at 06:00 am

from debtfreeme: how do you buy a stock one at a time?

I first learned about buying company stock and dividend reinvestment plans (DRPs) from my DH, who bought me my first share of Coke 7 years ago. Here's the deal. Many blue chip companies that pay a dividend offer to sell company stock to shareholders through a transfer agent who operates like a bank (most transfer agents are banks). You then send money to the transfer agent, who then buys however amount of shares with the amount of money you gave them. In addition, dividends that your stock generates can be sent to you or can be reinvested to buy more stock. Many of these plans are free, or nearly so. The ones I have officially charge a fee, but the company pays the fee for me.

To read more about them, here are some links...

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The biggest hurdle of DRPs is starting a DRP and getting that first share of stock. You actually have to own that share, it has to be in your name - its different than actually buying that share from a broker, who buys it for you but the broker owns the stock and tacks your name on it. A broker will transfer a share into your name for a fee. If you have a friend who owns a share of a company you want you can ask them to transfer a share to you. Sometimes you can inherit shares and convert them.

After you get the share, you have to send that share to the company's transfer agent with paperwork. That's time, hassle, and other fees. Smile
That's why I used The Temper Enrollment Services for my other two DRPs, here:
Text is and Link is Click on "DRIP search" in the top bar. Its a great place. You can type in a company symbol and it'll tell you a bit about the drip.

For the price of a share + 10% of the share (in case the price goes up!) + $30 to $50 on-time-only fee (depends on whether its a big popular DRP or not), Temper does the whole thing for you - buys the share, contacts the transfer agent, has the transfer agent set up the DRP. In my mind, its money well spent. It just takes awhile to set it up.

After Temper sets it up, they leave and you just send money to the transfer agent. Depending on the DRP, you can send big amounts too.

2 Responses to “DRPs explained”

  1. Anonymous Says:

    Thank you, i am going to look into it today!

  2. Amber Says:


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