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A number of Drips permit investors to buy stock at discounts
to the current market prices. Discounts are usually three to five
percent but may be as high as ten percent. Investors have the right to
buy attractive blue chip stocks when they otherwise might not be able
to afford them.
Discounts apply only to shares purchased with reinvested dividends, some
apply the discount to purchases made with optional cash payments. The
main benefit of buying stocks directly from the company either through
a Direct Stock Purchase plan or a DRIP program is that the investor
doesn't always have to pay a commission when making a purchase as you
do with most brokers.
Bank of America (BAC), Progress Energy (PGN), and Procter & Gamble
(PG) offer drip programs. Some Drips purchase stock with optional cash
payments once a month, while others do so once a quarter or even once
a week. The timing of purchases may differ. Some firms buy on the
first business day of each month, while others purchase stock on the
fifteenth of each month.
The same is true on the sell side, when it may take five to ten trading
days for a sell transaction to be settled. That is why the drips are
suited for longer term investing and not trading. Over time
differences in price should even out and not have much of an change on
your capitol.
Dividends that are reinvested for the purchase of more shares are
still considered income for tax purposes. Traders need to determine
the cost basis of stock for tax purposes when it comes time to sell.
The 1099 form that traders receive from the company each year gives
them this information.
Traders can begin a stock buying program in hundreds of quality stocks
through dividend reinvestment plans. The fact is it is not a stretch
to call Drips the most powerful investment tool available to new
investors.
How do you find out about drips with a company? Call the company,
talk to the shareholder relations department, and get a copy sent of
the plan prospectus. Eligibility requirements and fees for the
investor. Some drip programs allow traders to make optional cash
payments without reinvesting dividends, though some DRIP programs also
charge a fee. Some Drips permit investors to take possession of some
of their dividends and reinvest the remainder, while others require
that all dividends be reinvested.
Here is a short list of companies that offer drips for investors.
AMB Property Corp. (NYSE: AMB)
(800) 331-9474
Discount: Up to 5 percent discount on reinvested dividends and
OCPs.
Anadarko Petroleum Corp. (NYSE: APC)
(888) 470-5786 (800) 842-7629
Discount: 5 percent discount on reinvested dividends.
Aqua America (NYSE: WTR)
(610) 527-8000 (800) 205-8314
Discount: 5 percent discount on reinvested dividends.
Atmos Energy Corp. (NYSE: ATO)
(972) 934-9227 (800) 382-8667 (800) 543-3038 (800) 774-4117
Discount: 3 percent discount on reinvested dividends.
Ball Corp. (NYSE: BLL)
(303) 469-3131 (800) 446-2617
Discount: 5 percent discount on reinvested dividends.
Capital One Financial Corp. (NYSE: COF)
(800) 685-4518 (800) 446-2617
Discount: Up to 3 percent during certain market periods.
Cathay Bancorp, Inc. (NASDAQ: CATY)
(213) 625-4700
Discount: 5 percent discount on reinvested dividends.
Cavalier Homes, Inc (NYSE: CAV)
(800) 851-9677
Discount: 5 percent discount on reinvested dividends and OCPs.
CBL & Associates Properties, Inc. (NYSE: CBL)
(423) 855-0001
Discount: 5 percent discount on reinvested dividends.
Entergy Corp. (NYSE: ETR)
(800) 225-1721
Discount: Up to 3 percent discount on OCPs.
Equity Residential Properties Trust (NYSE: EQR)
(800) 733-5001
Discount: Up to 5 percent discount on OCPs.
First Commonwealth Financial Corp. (NYSE: FCF)
(800) 727-7033
Discount: 5 percent discount on reinvested dividends and OCPs.
Health Care REIT, Inc. (NYSE: HCN)
(888) 216-7206
Discount: 4 percent discount on reinvested dividends and OCPs.
Healthcare Realty Trust, Inc. (NYSE: HR)
(615) 269-8175
Discount: 5 percent discount on reinvested dividends.
Home Properties of NY, Inc. (NYSE: HME)
(888) 245-0458
Discount: 3 percent discount on reinvested dividends and OCPs.
OCP: $50 to $5000 per month. |
