Dividend Re-Investment Plans
Many people purchase shares through a broker or an online service, or more likely through an investment plan as part of yoru employment package. In most of these cases you purchase the stock with the intent of buying and holding it for a long time.
If you are that kind of investor, you should definitely look into DRiPs - Dividend Re-Investment Plans. Many of these are handled directly through the company. You deposit money with the company and they sell you shares at market value. All dividends are then re-invested into the plan, buying you new shares. You can regularly have money placed in these accounts through a monthly draw on your bank account as well. Think of them as high-powered savings accounts, allowing you to save this money while it earns the interest. All purchases are made at the market value of the stock at the time of purchase, as are the divided re-investments.
Othe ron-line brokers offer this as well, even for companies that don’t have their own DRiP program. You can ask Sharebuilder to automatically re-invest the dividends into the fractional shares, and Sharebuilder as well as the other brokers are happy to perform this service - they don’t charge fees on the partial shares via dividend purchase, but they will charge the usual broker fees for the ‘normal’ stock purchases you make for your investment.
Not all companies offer DRiPs, but those that do will not usually charge a fee - or at least nor a sizeable one - but going through an onlin ebroker will let you turn any stock investment into a DRiP.
