DRiP Downsides and Post 500!

in DRIP

The great financial site FMF had an interesting posting with an interesting downside to Dividend ReInvestment Plans. DRIP downsides are not that many, but they are still a good idea.

And I quote:

Generally, I think they are a good deal if you’re interested in one stock in particular as they decrease costs in acquiring the stock. However, you must be willing to deal with extra paperwork as each DRIP will be its own account (as far as I know) versus being able to hold many stocks in one brokerage account.

Now I never have seen that with my holdings that I have DRiP “turned on” for, and it sounds like a royal pain in the tuchos, if that is the case. Not sure if this is a regulatory thing in the states, or their trading account owners screwing around, but this would drive me crazy as well. It also means that the power of the DRiP, which is adding more stock, and thus making future dividends larger, kind of gets lost in this type of set up, no? Seems kind of odd.

And this is my 500th Posting too!!!!!

{ 2 comments }

  • FMF March 13, 2007, 11:28 AM

    Congrats on 500!!!!

    What I meant to say in the post is that (as far as I know) each DRiP has to be set up directly with the company and thus each is its own account. So if you have five DRip stocks, you have five accounts — versus having one brokerage account to hold all five stocks.

    Five accounts versus one — one is easier to manage. 😉

    Reply
  • Big Cajun Man March 13, 2007, 11:43 AM

    Interesting because with my account, I call in and they set up the DRiP and manage that part of things (however, they keep forgetting to add the companies I ask to join, so I have to call a few times).

    I like DRiPs for now, call me in 20 years 😉 –C8j

    Reply

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