Those Buying Shares With DRIPs, Aren't Drips

Dividend reinvestment plans avoid broker fees

FOR someone not enrolled in a company investment or pension plan, the cheapest way to acquire stocks is probably by having one or two ''DRIPs'' around the house.

DRIPs are ''direct purchase'' and ''dividend reinvestment plans'' -- not the costly drips plumbers deal with. DRIPs are offered by many of the largest blue-chip public corporations in the United States. Being a member of a DRIP stock-ownership plan can add up to substantial savings on broker's commissions while also letting you hobnob with the movers and shakers of Wall Street. And being part of a ''DRIP'' is usually as simple as picking up the telephone and dialing an 800 number.

Some 23 major corporations will let you buy their stock directly, without having to go though an investment house or discount broker, and thus save money on broker's fees. You just need to call the company.

If you already have shares in a company, more than 800 firms will let you reinvest your dividends and buy additional shares, including fractional shares, by dealing directly with the company. Once you own stock in companies providing reinvestment of dividends, you may even be able to send in cash payments to buy additional shares -- again, totally bypassing a broker.

One direct purchase example: Exxon Corporation. By calling 1-800-252-1800 one can talk directly to an Exxon ''shareholder'' representative. The representative asks for your name and mailing address. Exxon then mails you forms to enter their stock program. You must return the documents, along with a check for $250. Once you've done that, you will be enrolled, and you'll also be an Exxon shareholder. You can make subsequent purchases with a minimum of $50, according to Jeff Gabriel, an Exxon representative.

Other direct purchase account choices include: Barnett Bank, based in Florida, with a minimum payment of $250; Texaco, $250; Tenneco, $500; Mobil, $250; Morton International, $1,000; US West, $300. Companies that allow you to acquire new shares through a reinvestment of dividends include AT&T, the Baby Bell regional phone carriers, and McDonald's Corporation.

Being in a direct purchase plan or dividend reinvestment plan is particularly appealing to people ''who want control over their investments,'' and don't like ''having to depend on an outside adviser or mutual fund,'' says Sumie Kinoshita, editor of several directories on DRIPs published by Evergreen Enterprises in Laurel, Md. Not only can you better monitor your individual stock holdings, Ms. Kinoshita says, but ''you can actually talk to company officials, you get annual reports, and you can even attend your company's annual meeting if you want.''

The downside of such plans, experts say, is that one can't time purchases and sales as well as by going through a broker. Thus, a company may have particular days on which it buys or sells stock for its plan. On a selling day, for example, the price-per-share may have fallen sharply, thus reducing profits.

Ownership of shares can be handled through ''book-entry'' registration, which means that a person doesn't have to physically hold a stock certificate. But certificates can still be obtained from many companies. About half of the stock-plan companies will not charge a fee for obtaining the certificate. Some companies, for a modest fee, also offer a custodial service to hold the certificates, says Ms. Kinoshita.

That could be important if you decide to sell shares, since, starting June 7, the US Securities and Exchange Commission will require that a trading transaction must be completed within three business days after the trade.

Some companies will also undertake partial sales for shareholders -- selling off a fraction of one's shares. While there is often a fee, it is usually less expensive than using a broker.

Evergreen Enterprises publishes ''The Directory of Companies Offering Dividend Reinvestment Plans,'' which costs $29.95, plus $2.50 shipping. It can be ordered by writing care of P.O. Box 763, Laurel, MD, 20725-0763.

To participate in a dividend reinvestment plan, an investor, as noted, usually must own at least one share of stock from that particular company. Going through a broker for a single share could be expensive. One alternative: Contact a consumer group called First Share, at 1-800-683-0743. By paying a membership fee plus a service charge to find a seller, First Share will help you buy an initial share in many companies without having to pay a broker's fee.

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