CWA Dividend Reinvestment Plans Report

Article Excerpt

Dividend reinvestment plans, or DRIPs, are plans offered by some companies that let shareholders receive additional shares of stocks or trusts in lieu of cash dividends. The advent of low cost discount brokerage and on-line investing has reduced the commission cost of investment trades to low levels. Thus, the commission free investing that DRIP investing allows is less of an advantage today than it was in the past. Still, DRIPs can be a good way to slowly build wealth over a long period, for a number of reasons. First, they eliminate the nuisance of receiving small cash dividend payments. Second, some DRIP plans let you reinvest your dividends in additional shares at a 5% discount to current prices. Third, many DRIP plans also allow optional commission-free share purchases on a monthly or quarterly basis. DRIPs let you reinvest your dividends in the company’s shares without paying brokerage commissions, though service charges may apply. In column six below, we tell you if the company…

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