July 2012
Beginner
201 pages
5h
English
Content preview from Get Rich with Dividends: A Proven System for Earning Double-Digit ReturnsBecome an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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CHAPTER 9
DRIPs and Direct Purchase Plans
I hope by now you see the wisdom of reinvesting dividends if you’re attempting to build wealth for the long term.
Typically, the easiest way to do it is through your broker. Most brokers do not charge commissions or fees for reinvesting dividends. If yours does, find a new one. There’s really no reason to pay a fee or commission on such a small transaction.
When you allow your broker to reinvest the dividends for you, all of your portfolio information is in one convenient place.
However, not everyone likes to keep his or her stock in their brokerage account. Some like to deal directly with the company they’re invested in.
Those people can usually reinvest their dividends through the company itself in what is known as a Dividend Reinvestment Plan (DRIP). You can also buy more stock directly from the company if it offers a Direct Stock Purchase Plan (DSPP).
With a Direct Stock Purchase Plan, you send your check right to the company, and it credits your account with more shares. If you own 100 shares of a $20 stock and send the company another $200, your account will show that you are the proud owner of 110 shares (assuming there are no fees, which there often are—we’ll get to that in a minute).
But here’s why I don’t like DRIPs and DSPPs: They often have fees and commissions that are higher than those of a broker.
For example, let’s take a look at Altria (NYSE: MO), a company that qualifies under the 10-11-12 System. Its yield is 5.7% and ...
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I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.