How to Buy Direct Purchase Stock Shares

DRIPs & DPPs

Buying shares directly from the company instead of through a broker is a common practice. So common, in fact, that there are financial products called direct purchase plans (DPPs) and a dividend reinvestment plans (DRIPs). Both represent an opportunity for an investor to buy stock directly from the company without going through an intermediary. There are some qualifications, but thousands of firms offer programs.

Instructions

1. Review direct purchase stock shares definition. DPPs became popular in the 1990s as new U.S. Securities and Exchange Commission (SEC) rulings made it easier to buy directly from companies. This has the benefit of reducing transaction fees, which can eat away your profits.

2. Understand the fee structure. Brokerage fees can sometimes be replaced by administrative fees in a direct purchase. Each plan has a different fee structure, so be sure to review carefully.

3. Determine what you want to buy. This will help in determining who to contact in order to make your purchase.

4. Contact the corporate office for the company you want to purchase direct stock shares from. Ask to speak with the Investor Relations Department. The company also may have a program through Sharebuilder.com, a company that facilitates direct purchase investments.

5. Contact your bank or brokerage. Some companies have a direct purchase option but manage it through a bank. These programs still can be cheaper than going through a brokerage.

6. Request information on eligibility criteria and program procedures. Some companies only sell direct shares to residents of the states in which they do business in.

References

• Invest FAQs

Resources

• Sharebuilder