How to Enroll in a DRIP
Becoming enrolled in a Direct Investment Plan (DRIP) is a one-time event. Basically, you need to get on the books and records of the company’s transfer agent. How you do this –whether through the transfer agent directly, by buying the minimum number of shares through a traditional broker, or enrolling through a DRIP enrollment service, is not as important as whether there will be fees for subsequent investments.
If you choose DRIPs that don’t charge such fees, you can keep investing with no additional costs or commissions for as long as you own the shares.
You can find information on every company that offers a DRIP, including whether they charge fees, at this site.
Direct Enrollment Plans vs. Shareholder Plans
Most DRIPs require shareholder status and don't charge fees for ongoing investments. These plans are available from such companies as 3M, Abbott Labs, ExxonMobil, Paychex, Raytheon, Wisconsin Energy.
Some plans accept enrollment from the general public through transfer agents without shareholder status. But these plans, known as direct enrollment plans (DEs), are more likely than shareholder plans to levy fees for ongoing investments. IBM, Mattel, McDonald’s, Disney, and Ford are among the companies that offer DEs that charge fees.
Typically, the fee for investing is $5, plus commissions! In addition, the vast majority of DE plans charge an enrollment fee of $10 or $15. Another negative of DE plans is that many require an initial investment of $250-$1,000.
Using a DRIP Enrollment Service
Because transfer agents, fees, required minimum share purchases, and enrollment procedures vary by company, many investors prefer to use the one-of-a-kind DRIP enrollment service offered by Temper of the Times Investor Services Inc. Temper sets up DRIP accounts for virtually every company that offers one (more than 1,000 companies). It is the only such service available in the world.
First, select companies into which you would like to invest. If the company can be obtained through the Temper Enrollment Service, a sign “Order Enrollment in this DRIP” will be displayed under the General Information about the company.
Complete the Temper Enrollment Service (TES) Order Form. You can order online or print an order form and send your order through the mail.
You may purchase the minimum number of shares required by the plan to open an account (usually one), or as many as 100 shares.
The Enrollment Service does all the work after that: It acquires the share(s) for you to qualify as a shareholder; submits the paperwork to get the account opened; maintains contact with the transfer agent until your share(s) are credited to your new account; and lets you know when you are enrolled in the plan(s). You may order for yourself or as a custodian for a child. (Go to www.giftsofstock.com to give gifts to friends and family members.)
After your Account is Open…
Once you are enrolled in the plan(s), you can make investments directly to your account by tearing off the bottom portion of the statement you receive.
Many companies allow you to invest through automatic monthly checking account deductions. Those companies are shown as “auto inv. yes” in the General Information about the plan.
