Lowering Your Costs: How to Take Advantage of Direct Purchase Plans
In today’s lean and mean stock market environment, there is a real appeal to stocks that provide a stream of dividend income that can be purchased at a relatively low cost even if you are investing very modest sums of money.
Direct purchase plans allow you to do just that. The plans are a form of dividend reinvestment plan that allow you to go straight to the source—the company itself—for all share purchases, including your initial shares.
In this article
- A Broker Bypass
- Where to Get Information
- ADR Direct Purchase Plans
- Direct Purchase Plan Options
- The Costs
- A Note About Taxes
- Putting the Plans in Context
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Best of all, direct purchase plans are easily accessible and manageable through on-line accounts with the plan administrators, a select group that currently consists of four major firms.
Currently, a little over 400 companies offer direct purchase plans, with minimum initial investments ranging from as low as $50 to as high as $1,000, although $200 to $250 is the most typical minimum range.
In addition, a growing number of foreign company stocks now have direct purchase plans available through their ADR (American depositary receipts) programs.
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