Hundreds of companies, based in the U.S. and around the world, offer dividend reinvestment plans (DRIPs). You must be a shareholder to participate; then your dividends automatically will be reinvested in shares of that company’s stock. DRIPs offer other benefits:
* Direct investing. Most DRIPs allow participants to buy more shares of the company’s stock.
* Regular investing. You can invest the same amount each week, say, or each month or each quarter. If you’re investing $100 and the stock trades at $37 a share, you would buy 2.7 shares.
* Low-cost investing. By buying shares through the DRIP, you avoid paying a broker’s commissions. That’s true even if you’re buying few shares. Brokerage firms may prefer to deal in trades of "round lots" (100 shares) rather than small "odd lots."
Many DRIPs allow participants to buy shares without paying any fees at all. Even if a DRIP charges a fee, the cost probably will be less than you’d pay by going through a broker.
