DRIP Investor

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Check out Chuck's interview with Steve Halpern on Moneyshow.com where he explains the difference between price to earnings (PE) and price to earnings growth (PEG).

DRIP Investing WORKS!

Over Twenty Years of Success — and Still Going Strong

Twenty-four years ago, I wrote the first issue of DRIP Investor. When I survey the more than 20 years since that first issue, a lot has changed in DRIP (Dividend ReInvestment Plans) investing, much for the better.  For example, in that first issue in 1992, there were less than 10 companies that permitted investors to buy their first share and every share of stock directly.

Today, the number of companies permitting initial purchases has grown to over 400 firms.  There are a similar number of foreign stocks whose shares trade on U.S. exchanges that also allow U.S. investors to buy shares directly, the first share and every share.  I’m not sure there was even one foreign company allowing U.S. investors to buy initial shares in 1992.

Today’s DRIP plans certainly are quite robust from a service level.  There are:

DRIPs that have IRA options

DRIPs with discounts

DRIPs with borrowing features

DRIPs with automatic investment programs via electronic debit of a bank account

DRIPs that permit market orders

DRIPs that permit online buys and sells

Very few, if any, DRIPs provided these features 24 years ago.  But perhaps the biggest takeaway from over 20 years of DRIP investing is this:  DRIP investing works.

The combination of long-term (one might even call it the much-maligned “buy-and-hold”) investing, dividend reinvestment, dollar-cost averaging, and no-cost/low-cost investing is a powerful strategy for wealth creation.  It worked for me, and it has worked for many of the investors who started with our Charter issue over 20 years ago and are still with us today!

The big question, of course, is whether investors can make money in the stock market going forward, and whether they can make money the “old-fashioned” way – buying and holding quality stocks, reinvesting dividends, using price declines to accumulate more shares, and pinching their pennies when it comes to transaction costs.  If you ask me, the answer is unequivocally “yes.” 

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Don't Sell Quality Utilities

Charles Carlson, CFA
Editor, DRIP Investor Newsletter

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