Stock Investing For Dummies, 6th Edition

Chapter 19

Getting a Handle on DPPs, DRPs, and DCA … PDQ

IN THIS CHAPTER

Buying stock directly from a company

Looking at dividend reinvestment plans

Using dollar cost averaging

Who says you must buy 100 shares of a stock to invest? And who says that you must buy your stock only from a broker? (There goes that little voice in my head… .) Can you buy direct instead? What if you only want to put your toe in the water and buy just one share for starters? Can you do that without paying through the nose for transaction costs, such as commissions?

The answer to these questions is that you can buy stocks directly (without a broker) and save money in the process. That’s what this chapter is about. In this chapter, I show you how direct purchase programs (DPPs) and dividend reinvestment plans (DRPs) make a lot of sense for long-term stock investors, and I show how you can do them on your own — no broker necessary. I also show you how to use the method of dollar cost averaging (DCA) to acquire stock, a technique that works especially well with DRPs. All these programs are well-suited for people who like to invest small sums of money and plan on doing so consistently in the same stock (or stocks) ...