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Why are drips so popular here?
Posted on 7/12/14 at 10:19 am
Posted on 7/12/14 at 10:19 am
Seems there is always a drip thread on the front page.
Drips were fine when commissions were high but geez today you can trade for $9 and reinvest dividends for free.
Having stock in a drip means you have to transfer it to some broker to sell it or comply with the company's sell provisions. If it is already in a broker you can click a button and sell it.
Here is a good article. LINK
I think if I am starting with a thousand I would do a mutual fund till I got up to 4 or 5 thousand and then I would own only individual stocks. Here are some fund families besides the big guys I like
LINK
LINK
Drips were fine when commissions were high but geez today you can trade for $9 and reinvest dividends for free.
Having stock in a drip means you have to transfer it to some broker to sell it or comply with the company's sell provisions. If it is already in a broker you can click a button and sell it.
Here is a good article. LINK
I think if I am starting with a thousand I would do a mutual fund till I got up to 4 or 5 thousand and then I would own only individual stocks. Here are some fund families besides the big guys I like
LINK
LINK
This post was edited on 7/12/14 at 10:33 am
6
Posted on 7/12/14 at 10:30 am to I B Freeman
Posted on 7/12/14 at 11:03 am to I B Freeman
There is zero cost to setup drips directly through some companies (not all). As doing this outside of my retirement plans, i don't have much to get it started. So avoiding a $9 fee to buy, and having the company reinvests the dividends at no cost is attractive to me.
There will be fees on the back end to sell the shares (ie $15 plus a couple cents per share), but at this point the more dollars i can get into stock without fees is a plus.
There will be fees on the back end to sell the shares (ie $15 plus a couple cents per share), but at this point the more dollars i can get into stock without fees is a plus.
This post was edited on 7/12/14 at 11:05 am
Posted on 7/12/14 at 11:24 am to I B Freeman
Partial shares and 3-5% dividends is what I like.
Posted on 7/12/14 at 12:12 pm to Boh
Making an account with vanguard means no commissions to buy or sell ANY of their products.
And if you like dividends there are multiple funds and ETFs centric on that.
Same prob goes for other vendors with their own branded assets.
Just saying, the reasons why you like DRIPS aren't exclusive to DRIPS.
For my part I just feel they may be setting themselves up for headaches later if something happens that makes them want to divest from the company. There are very few companies that I would be comfortable investing for a lifetime time span.
One thing I don't get: Don't you mostly have to buy the DRIP from the company itself? Thus having DRIPS all over the place?
What is the difference with buying the stock at your brokerage and just reinvesting dividends? Is it just to limit the damage of fees eating into your 200 dollars here and there?
Doesn't seem worth it from a ease of use standpoint given that many brokerages offer things from 4-9 dollars to buy, amd many offer free trades given certain conditions.
Some even let you buy fractional shares.
And if you like dividends there are multiple funds and ETFs centric on that.
Same prob goes for other vendors with their own branded assets.
Just saying, the reasons why you like DRIPS aren't exclusive to DRIPS.
For my part I just feel they may be setting themselves up for headaches later if something happens that makes them want to divest from the company. There are very few companies that I would be comfortable investing for a lifetime time span.
One thing I don't get: Don't you mostly have to buy the DRIP from the company itself? Thus having DRIPS all over the place?
What is the difference with buying the stock at your brokerage and just reinvesting dividends? Is it just to limit the damage of fees eating into your 200 dollars here and there?
Doesn't seem worth it from a ease of use standpoint given that many brokerages offer things from 4-9 dollars to buy, amd many offer free trades given certain conditions.
Some even let you buy fractional shares.
This post was edited on 7/12/14 at 12:19 pm
Posted on 7/12/14 at 12:18 pm to I B Freeman
I like DRIPS because I can get movie tax credits with them.
Posted on 7/12/14 at 12:19 pm to LSURussian
Wondered how long before that came up 
Posted on 7/12/14 at 12:33 pm to Volvagia
Posted on 7/12/14 at 12:59 pm to bayoubengals88
Because this board is also obsessed with dividend yield.
It's like these people are stuck in 1920's stock valuation.
It's like these people are stuck in 1920's stock valuation.
Posted on 7/12/14 at 1:27 pm to Volvagia
quote:
One thing I don't get: Don't you mostly have to buy the DRIP from the company itself? Thus having DRIPS all over the place?
No. You tell your brokerage to enroll you in the program. They take care of everything.
quote:
Doesn't seem worth it from a ease of use standpoint given that many brokerages offer things from 4-9 dollars to buy, amd many offer free trades given certain conditions.
This would fall under that free trade condition. Just not a "conventional trade" I'm not sure what the aversion to it is. I like free, even if we talking a few bucks. They add up. That's kind of the point with investing.
ETA: Probably depends on the brokerage. I use TD, their program is free.
This post was edited on 7/12/14 at 1:32 pm
Posted on 7/12/14 at 2:48 pm to Boh
quote:
There is zero cost to setup drips directly through some companies (not all). As doing this outside of my retirement plans, i don't have much to get it started. So avoiding a $9 fee to buy, and having the company reinvests the dividends at no cost is attractive to me.
My thoughts exactly.
I only have 4 Drips so it's not like a mutual fund with small amounts of money in dozens of stocks. I also have a mutual fund managed by a financial guy. My Drips have significantly outperformed my mutual fund in 9 of the last 10 years.
Posted on 7/12/14 at 3:09 pm to Zach
The real question is whether your drips significantly outperformed the market as a whole.
Posted on 7/12/14 at 3:25 pm to Zach
quote:
My thoughts exactly. I only have 4 Drips so it's not like a mutual fund with small amounts of money in dozens of stocks. I also have a mutual fund managed by a financial guy. My Drips have significantly outperformed my mutual fund in 9 of the last 10 years.
You should have changed mutual funds and financial guy 8 1/2 years ago.
Posted on 7/12/14 at 3:37 pm to TheHiddenFlask
quote:
Because this board is also obsessed with dividend yield.
It's like these people are stuck in 1920's stock valuation.
What does dividend yield have to do with drips??? I get my dividends reinvested at no charge in my Ameritrade account.
Posted on 7/12/14 at 3:42 pm to Zach
quote:
My thoughts exactly.
I only have 4 Drips so it's not like a mutual fund with small amounts of money in dozens of stocks. I also have a mutual fund managed by a financial guy. My Drips have significantly outperformed my mutual fund in 9 of the last 10 years.
what drips do you have. I just opened my first one this week with Chevron? There are a half dozen other companies that I would like to own a drip with.
Posted on 7/12/14 at 4:07 pm to tiger perry
quote:
what drips do you have. I just opened my first one this week with Chevron? There are a half dozen other companies that I would like to own a drip with.
In order of total value..
Chevron
United Technologies
Medtronics
Procter and Gamble
All allowed direct purchase with the company.
Posted on 7/12/14 at 5:09 pm to Zach
quote:
Chevron
United Technologies
Medtronics
Procter and Gamble
my second choice was probably Procter and Gamble which I own in a brokerage account and an IRA. Love that company.
Other DRIPS I would love:
Altria/Philip Morris
Mc Donalds
Coca Cola
Exxon
Disney
Posted on 7/12/14 at 6:55 pm to I B Freeman
It's easy. I buy the stock, reinvest the dividends and forget about it. And I like to make money.
Posted on 7/12/14 at 11:46 pm to SmackoverHawg
I'm still waiting for someone to explain to me what I get out of a DRIP that I don't get from a blue chip vanguard mutual fund set to reinvest dividends, other than less diversification.
Posted on 7/13/14 at 2:14 am to Joshjrn
You won't get that.
Because there is literally nothing.
At least that is what this thread is confirming to me so far.
The one con is expense ratio, but that is a very small price to pay for me considering the alternative of having a significant part of my portfolio planned to sit at one company for decades/my lifetime and hope it never really fizzles out.
I'll definitely pay .1% of gains in a fund, which on average will result in a higher net return anyway than a group of DRIPS so you lose nothing.
Because there is literally nothing.
At least that is what this thread is confirming to me so far.
The one con is expense ratio, but that is a very small price to pay for me considering the alternative of having a significant part of my portfolio planned to sit at one company for decades/my lifetime and hope it never really fizzles out.
I'll definitely pay .1% of gains in a fund, which on average will result in a higher net return anyway than a group of DRIPS so you lose nothing.
This post was edited on 7/13/14 at 2:25 am
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