Advantages of Direct Stock Purchases
Benefits of direct stock purchase plans include low or no fees, the ability to set up automatic periodic investments and automatic reinvestment of earned dividends. Individual companies set up direct purchase plans to allow investors to buy shares of stock in a company without going through a broker.
It might be a good strategy for people who simply want to have a direct method of ownership, without an intermediary—and some investors appreciate the DSPP programs that allow dividends to be automatically reinvested into additional shares of stock (something that not all companies that offer DSPP programs do).
A direct stock purchase plan (DSPP) is an investment plan that allows individuals to purchase stock in a company directly from the company or through their transfer agent.
The intention behind the share purchase plan is to allow shareholders buying opportunities outside normal trading, and to access the type of discounts normally reserved for big, institutional investors. It also provides the opportunity to combat any dilution resulting from the placement and issue of new shares.
For one thing, not all companies offer direct-stock-purchase programs, including Google. And even for companies that do offer the purchase plans, such as Walt Disney, there aren't necessarily huge savings for investors. ... But investors can set up free accounts with no minimums at many online brokerages.
Examples of companies that offer direct stock purchase plans are Walmart, Starbucks, and Coca-Cola. Similar to the brokerage model, investors initiate the direct stock purchase by transferring money from their checking or savings accounts, and the money is used to purchase shares.
You can buy Coca-Cola stock from a brokerage firm or directly from the company itself. To get a return on your stock investment, you must buy Coca-Cola stock at the right time. Review company financial results, the annual report and trade journals to determine the best time to invest in the company.
For most new investors, an online brokerage account will be the easiest way to get into the stock market. But if you're still keen to start investing without a broker, look for companies that offer a direct stock plan, which lets you purchase shares directly from the company for a low fee or no fee at all.
If you are not an employee, you can buy stock from a company directly through either a Direct Stock Purchasing Program (DSPP) or a Dividend Reinvestment Plan (DRIP). By purchasing stock through a DSPP or DRIP, you can bypass brokers and brokerage fees to buy stock directly from your company of choice.
| Stocks with the Most Momentum | ||
|---|---|---|
| Price ($) | Market Cap ($B) | |
| L Brands Inc. ( LB) | 67.44 | 18.8 |
| Tesla Inc. ( TSLA) | 694.40 | 666.5 |
| Freeport-McMoRan Inc. ( FCX) | 39.35 | 57.6 |
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