Direct investing.Direct stock purchase plans make a splash on the Internet
For years, cost-conscious individual investors who balked balk
v. balked, balk·ing, balks
1. To stop short and refuse to go on: The horse balked at the jump.
2. at paying brokers' fees to buy stocks have propelled the growth of direct stock purchase plans, called DSPs. This desire to cut out the middleman mid·dle·man
1. A trader who buys from producers and sells to retailers or consumers.
2. An intermediary; a go-between. has also fueled the proliferation of Websites devoted to DSPs and DRIPs, or dividend reinvestment plans Dividend Reinvestment Plan (DRP)
Plan which provides for automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. .
The sites range from the transaction-related, such as Netstock Direct (www.netstockdireet.com), to the purely informational, such as DRIP Central (www.drip central.com). Others offer access to a number of DSPs and DRIPs, but charge fees to provide this service. They also try to sign up subscribers to other, ancillary products.
Jeff Seely Jeff Seely (b. Newark, New Jersey, 1954) is an executive in the securities industry and serves as chairman and chief executive officer of ShareBuilder Corporation.
In 1998, Seely created ShareBuilder Securities as an online brokerage to serve middle market investors and to , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Bellevue, Washington-based Netstock Direct, boasts that his site is the only one that does not charge investors a fee. The firm currently has 1,600 companies offering their DSPs on the site, but charges a minimum fee to only 250 of those companies which post their enrollment materials on the site. They include such well-known companies as BP Amoco (NYSE NYSE
See: New York Stock Exchange : BPA BPA British Paediatric Association. ), General Electric (NYSE: GE) and Home Depot The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services.
Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, Home Depot employs more than 355,000 people and operates 2,164 big-box (NYSE: HD). However, Seely faults firms that serve only as portals to company DSPs. "On the Web today, to get you to the door of a transaction but not open the door is not what customers expect. It's like going to Amazon.com and not being able to buy the books," he says.
Here's the catch with most DSPs, however: they require a minimum investment of at least $250. Others, like Lucent Technologies (NYSE: LU), ask you to plunk down Verb 1. plunk down - set (something or oneself) down with or as if with a noise; "He planked the money on the table"; "He planked himself into the sofa"
plonk, flump, plank, plump, plump down, plunk, plop $1,000--an amount beyond the reach of some mom-and-pop investors. Some companies, like IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) (NYSE: IBM), will waive their minimum initial investment if you join their automatic debit plan. IBM's requires $50 a month for 10 months in lieu of a $500 minimum investment.
There are a handful of companies, however, that do offer one-share purchase plans, which allow investors who have never owned stock in a company because of high initial investment requirements to purchase just a single share. One relatively cheap way to buy such stocks is through the National Association of Investors Corp.'s Low-Cost Investment Plan (www.better-investing.org). Kenneth S. Janke, president of the NAIC NAIC
See National Association of Investors Corporation (NAIC). , a Madison Heights, Michigan Madison Heights is a city in Oakland County of the U.S. state of Michigan. It is a suburb of Detroit. As of the 2000 census, its population was 31,101. History
Originally part of Royal Oak Township, Madison Heights incorporated as a city by popular vote on January 17, , umbrella organization
An umbrella organization is an association of (often related, industry-specific) institutions, who work together formally to coordinate activities or for investment clubs, says the group offers this one-stock purchase option for 155 companies through its Website. If you are a NAIC member, there is a $7 setup fee to enroll, a $10 price fluctuation fee, plus the cost of one share of the company stock you want to buy.
Among the companies in NAIC's low-cost program are AT&T Corp. (NYSE: T), Mobil Corp. (NYSE: MOB) and Wendy's International Wendy's International, Inc. NYSE: WEN is the parent company of Wendy's Old Fashioned Hamburgers. It also owns 70 percent of Cafe Express and 25 percent (fully diluted) of Pasta Pomodoro. The Tim Hortons chain was spun off by Wendy's into a separate company in September 2006. Inc. (NYSE: WEN wen, benign, slow-growing, painless cyst of the skin resulting from obstruction of the sebaceous gland ducts. It is frequently found on the scalp, ears, face, back, or scrotum. Usually no treatment is required. Large wens may be surgically removed. ).
RELATED ARTICLE: Bypass Your Broker
Want to buy shares of your favorite company directly without paying a broker's fee? So do some other individual investors. The following stocks were the top 10 most sought after no-load stocks No-load stock
Shares that can be purchased from the issuing companies themselves, so that broker fees and commissions can be avoided. by visitors to www.netstockdirect.com as of June 1, 1999.
Minimum Initial Minimum Company/Ticker Investment Reinvestment Fannie Mae (NYSE: FNM) $250 $25 General Electric 250 10 Co. (NYSE: GE) Home Depot 250 25 Inc. (NYSE: HD) IBM Corp. (NYSE: IBM) 500 50 Lucent Technologies 1,000 100 Inc. (NYSE: LU) Merck & Co. 350 50 Inc. (NYSE: MRK) Wal-Mart Stores 250 50 Inc. (NYSE: WMT) Walgreen Co.(NYSE: WAG) 50 50 Walt Disney 1,000 100 Co.(NYSE: DIS) Warner-Lambert 250 50 Co. (NYSE: WLA) Stock Company/Ticker Price(*) Website Fannie Mae (NYSE: FNM) $67.31 www.fanniemae.com General Electric 102.56 www.ge.com Co. (NYSE: GE) Home Depot 55.81 www.homedepot.com Inc. (NYSE: HD) IBM Corp. (NYSE: IBM) 112.00 www.ibm.com Lucent Technologies 56.00 www.lucent.com Inc. (NYSE: LU) Merck & Co. 68.13 www.merck.com Inc. (NYSE: MRK) Wal-Mart Stores 43.45 www.wal-mart.com Inc. (NYSE: WMT) Walgreen Co.(NYSE: WAG) 23.76 www.walgreens.com Walt Disney 28.81 www.disney.com Co.(NYSE: DIS) Warner-Lambert 61.81 www.warner-lambert.com Co. (NYSE: WLA)
(*) Closing price as of 6/1/99
Source: Netstock Direct
RELATED ARTICLE: For First-Share Buyers
If you don't have a single share of a company's stock and want to avoid high initial investment fees, first-share purchase plans can help The following are the stocks bought the most by members of the National Association of Investors Corp., a trade group for investment clubs, through its Low-Cost Investment Plans.
Number of Minimum Company/Ticker Purchases(*) Reinvestment Intel (Nasdaq: INTC) 11,000 N/A Wendy's International 7,900 $20 Inc. (NYSE: WEN) Diebold Inc.(NYSE: DBD) 7,000 10 RPM Inc. (NYSE: RPM) 4,600 26 AFLAC Inc. (NYSE: AFL) 4,300 50 AT&T Corp. (NYSE: T) 2,600 100 Emerson Electric 1,900 N/A Co. (NYSE: EMR) GTE Corp. (NYSE: GTE) 1,800 25 Newell Corp. (NYSE: NWL) 1,600 10 Stock Company/Ticker Price(**) Website Intel (Nasdaq: INTC) $50.69 www.intel.com Wendy's International 27.81 www.wendys.com Inc. (NYSE: WEN) Diebold Inc.(NYSE: DBD) 28.25 www.diebold.com RPM Inc. (NYSE: RPM) 13.69 www.rpminc.com AFLAC Inc. (NYSE: AFL) 49.19 www.aflac.com AT&T Corp. (NYSE: T) 55.06 www.att.com/ir Emerson Electric 65.25 www.emersonelectric.com Co. (NYSE: EMR) GTE Corp. (NYSE: GTE) 63.56 www.gte.com Newell Corp. (NYSE: NWL) 43.00 www.newellco.com
(*) As of September 30, 1998, end of NAIC fiscal year; excludes stocks with minimum initial investment and other conditions.
(**) As of 6/1/99
Source: NAIC (www.better-investing.org)3