As you look at DRIPs, consider what types of advantages you’ll need. You can find details in the prospectus. Here are some key features you want to look for:
• You should not have to pay brokerage fees to buy additional shares. You may have to pay a processing fee for additional cash purchases, but make sure these fees are lower than what you would pay a discount broker.
• You should be able to reinvest dividends easily and automatically.
• You should be able to buy fractions of shares. That’s a big advantage of a DRIP over a brokerage house. With a brokerage house, the least you can buy is one share, so often your money sits in a money market account until you have enough money to buy a share. With a DRIP you can buy a fraction ...