How to Enroll in a DRIP
Enrolling in a Direct Investment Plan (DRIP) is a one-time event. All you need to do is get on the books and records of the company’s transfer agent. You can do this in a number of ways. By far the easiest way to become enrolled is through the enrollment service offered by Temper of the Times Investor Services, Inc. It accepts orders from up to 16 companies on any one order and will deal with the transfer agent until the accounts are opened in your name.
You can enroll in a DRIP through a traditional broker, but you must be certain that your broker buys the shares in your name, and not in the “street name” (which is the name of the broker). You cannot participate in a DRIP if your shares are not held in your name.
You can also make your first investment through the transfer agent if the company offers the option of Direct Enrollment (DE). These plans often charge a fee. In addition, you have to actually get in touch with the transfer agent first! The entire process is up to you.
Direct Enrollment Plans (Transfer Agent 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 through a DE (Transfer Agent) plan 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! For a small investor, having to make such a large initial investment may hurt the diversification of his portfolio. The shareholder plans, on the other hand, generally require only one share to qualify.
Using the Temper Enrollment Service to Enroll in Direct Stock Purchase Plans (Direct Investment Plans)
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 per company you wish to invest in.
The Enrollment Service does all the work after that: It acquires the share(s)—registered in your name, not “street name”—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.