Originally Posted by grumpy
I don't know if it is still the case (since I am no longer in the accumulation phase) but in the 90's I DRIP'd into a number of companies that gave a 5% discount. Along with the no commissions that gave me an immediate and guaranteed return of 5%. Add that to a 3 to 4 % dividend and you are already way ahead of the game. I eventually owned 25 DRIP stocks worth over $250,000. I then moved them all to Buy and Hold Securities. Check them out at:
The only problem is that (as I found out the hard way), most companies consider the discount they give you to be 'taxable income' (since they deduct it from their corporate taxes as an expense). So, it's not truly 5% discount....5% less your marginal tax rate.
I started with some DRIPs, but now Ameritrade has offered free DRIPs for about 5,000 securities, with fractional shares (they used to only do free drips if your dividends could buy at least one share, and they only bought whole shares). So now I've put most of my non-preferred stocks into DRIP plans with my broker. I figure I'll do a little a la Uncle Mic, let them stew and simmer for 5-7 years, then discontinue the drip and start finding new sources for all the cash to diversify a little more.