Buy stock without a broker with DRIPS

If you only have a very small amount to invest, stock broker commissions may be too high for you as they would eat into your profits too much.

It is possible to buy stock without a broker using DRIPs.

What are DRIPs?

A dividend reinvestment plan or a DRIP is a way for individuals to purchase shares in a company directly from them, bypassing the need for a broker. Many DRIPs offer the option to buy a set amount of stock each month. This amount can be as low as just $15 making them a possible option for small investors.

Lets examine some of the key facts about DRIPs:

  • Most DRIPs require you to own at least one share in the company to be eligible.
  • DRIPs do not require a stock broker so no trading commissions.
  • Dividends are usually reinvested rather than paid as cash.
  • DRIPs allow the purchase of partial shares. If a stock is priced at $50, you can still buy part of a share with $30.
  • Each DRIP has maximum number of shares that can be purchased.
  • Many DRIPs are very easy to invest in, often it can be all setup within a couple of minutes.
  • Some companies allow you to purchase DRIPs at a discount. I’ve seen discounts as high as 10%.
  • Most DRIPs allow additional cash purchases of stock at any time. These are known as Optional Cash Purchase Plans or OCPs.
  • Some companies run the DRIP themselves whilst others use transfer agents. A transfer agent is simply a company who takes over the running of the DRIP. An example is of transfer agent is computershare.
  • Some of the popular DRIPs include:

    Intel
    Fedex
    Dell

    Oneshare

    You may have noticed above that I mentioned many DRIPs require you to own at least one stock in a company to enroll in the DRIP. As the objective here is to buy stock without a broker, oneshare.com provides a specialist service that allows you to purchase single stocks in individual companies.

    By using Oneshare you can bypass the need for a broker and still get the stock you require to investing in a DRIP. Oneshare will even send you a framed copy of your stock ownership if you desire!