If You Are Investing A Few Hundred Dollars Per Month, Computershare Should Be Your Best Friend

www.computershare.com

Check it out. Scroll through the terms of some of the plans available.

If you looking to put less than $250 or so into a given stock each month, I’d stick with the companies that charge $0 in purchasing fees for each transaction by clicking here:

https://www-us.computershare.com/investor/3x/plans/buyshares.asp?stype=nof

Paying $2.50 in fees on a $1,000 monthly purchase is only a glorified rounding error, but paying $2.50 on a $100 monthly purchase is shooting yourself in the foot as you run the marathon of your investing life—you’re giving up 2.5% in your first year’s annual returns right away.

And plus, the companies that charge no purchase fees give you a good collection of offerings to choose from.

Want to own the most powerful energy supergiant that makes $35+ billion in annual profit across almost 40 countries and has returned 14% annually since 1965 while raising its dividend for three decades? You’re in luck—ExxonMobil charges no fees to build up a regular position in the energy supergiant for only a minimum $50 per month allocation.

https://www-us.computershare.com/investor/3x/plans/buyshares.asp?planid=312&state=eStateDisplayPlanSummary

Want a high earnings per share growth and a high dividend growth rate from a supersafe healthcare company not named Johnson & Johnson? Luckily, Becton Dickinson lets you contribute monthly without charge:

https://www-us.computershare.com/investor/3x/plans/buyshares.asp?planid=178&state=eStateDisplayPlanSummary

Want something close to Exxon with a higher starting dividend yield? Conoco, too, lets you build a position free of charge:

https://www-us.computershare.com/investor/3x/plans/buyshares.asp?planid=1021&state=eStateDisplayPlanSummary

And then there’s Dr. Pepper. This is an intelligent company to purchase monthly because it rarely gets overvalued—the fact that it is not PepsiCo or Coca-Cola seems to put a semi-permanent lid on the company’s valuation multiple, and this is good news for a long-term investor that wants to add $50, $100, $200 worth to the soda company every month. The company makes all of their soda by my old house in St. Louis, and they outsource a lot of their distribution to Pepsi and Coca-Cola, allowing the company to keep capital expenditures reasonable and return cash to shareholders on an ongoing basis.

https://www-us.computershare.com/investor/3x/plans/buyshares.asp?planid=744&state=eStateDisplayPlanSummary

And then there’s some other high-quality companies like Aqua America, Lockheed Martin, Abbott Labs, Abbvie, Phillips 66, and so on that are worth looking at.

Also, once you become familiar with navigating around the Computershare website and analyzing the fees associated with various plans, you can find the companies that are running effectively free drips. For instance, Johnson & Johnson allows you to purchase stock monthly for free if you pay by check. Procter & Gamble charges a $0.02 per share processing fee, and Nestle and Clorox charge $0.03 per share in processing fees—a quick scrounging for loose change in your seat cushions could cover your fees there for the year.

These plans don’t get advertised all that much  because there isn’t much of an incentive for anyone to tell you about them—after all, if you aren’t paying any fees, then that means no one is getting rich off of you. Banks and brokerage houses that charge $8.95-$75 per transaction don’t want you to realize you can invest just as effectively on a regular basis for a fraction of the cost.

If you dig hard enough, you could build a diversified portfolio on only $400 per month—establish a $50 per month drip in Exxon, Becton Dickinson, The Southern Company, Dr. Pepper, Procter & Gamble, Johnson & Johnson, Nestle, Aqua America, and Lockheed Martin. For about $1 or so per year, you’d effectively be buying shares of an oil giant, fast-growing healthcare company, electric utility, blue-chip soda company, consumer product supergiant, diversified healthcare manufacturer, packaged goods and drink powerhouse, water utility, and defense manufacturer for a cost of about $0.10 or so per month. Stick to that plan for a decade or two reinvesting the dividends and adding fresh funds, and you’ll wake up one day wondering when you got so loaded.

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31 thoughts on “If You Are Investing A Few Hundred Dollars Per Month, Computershare Should Be Your Best Friend

    1. Tim McAleenan says:

      The ones that say "Buy Now" to the side do not require you to get that initial share. The ones that say "Enroll Now" to the side do have the one share (and, in some cases, more) requirement.

  1. kingkang says:

    I've struggled with this exact issue recently. Pepsi used to be free. Now it charges a reinvestment fee ($2?) and a bundle of other fees. I put in $150 per month. But still debating on whether I should just cash out or stay in the long haul. Great company over time but fees fees fees.

    Anybody have thoughts?

    1. Tim McAleenan says:

      Here are the terms of the plan:

      It looks like you're paying $2.00 +$0.03 per share in processing fees. My rule of thumb with fees is to try and get the fees below 1%. If I were in your shoes, I'd try to put $215 or so into Pepsi each month. But still, $150 isn't a terrible situation–you're paying $24 per year to invest $1,800. It's in the category of things that make you shrug your shoulders and say, "Ehh." Not great, but not terrible either. Personally, I'd either try to get the Pepsi contribution above $200+ each month, and if that's not feasible, I might replace Pepsi by putting $75 each into Dr. Pepper and Procter & Gamble because it would be a decent substitute without the fees.

  2. kingkang says:

    Thanks for the response Tim. I thought about getting the fee to below 1% by contributing more. The only problem I see that is that since I've started DRIPping Pepsico a few years ago, my avg cost keeps going up. LOL

    In the end, I will make a lot of $$$ on pepsico, it will just come at a cost compared to an XOM or GIS where there are no fees.

    Stevens – thanks for the advice. That's what I did with another portion of assets and gave it to Schwabb. I actually prefer Schwabb's trading platform the best of all (compared to Tradeking, Fidelity, Etrade).

  3. sdb says:

    It is a little bit more expensive than the cheapest company sponsored DRiPlans, but a lot more flexible than any of them and less expensive than most. I prefer ShareBuilder.

    I used to have plans with ComputerShare, WellsFargo, and Bank of NY Mellon. Not any more.

  4. Salty26 says:

    Hi Tim,

    I started using Sharebuilder. They have a $12/mo plan for 12 automatic investments per month. I've been contributing at least $150 dollars a week in 3 different stocks: KO, XOM, INTC. I've done this for 3 months, each month I increase my contributions- so I've paid $36 to invest $2800. I guess that's a bit high? Their other plan is $4 for every automatic investment if you don't sign up for the 12 dollar a month plan. Do you think it would be better to pile up $600 a month and then deploy it into each stock? I like the automatic investment thing as i don't have to worry about share price. Sharebuilder gives me the option of automatic investments and to purchase shares whenever I'd like.

  5. kingkang says:

    $12 per month does seem a bit high. I guess you'll have to do the math on whether it's a better bargain to DRIP each one individually or do it all through Sharebuilder. I guess you pay the premium of the convenience of having it all in Sharebuilder which is nice instead of flipping between Wells Fargo and Computer.

  6. I pay a premium and use Fidelity @ 7.95/trade. At that price, $500 investment costs around 1.5% of the investment which is a bit high but I've used them for years and prefer to keep everything on one platform. As @KingKang commented, sometimes you just pay for the convenience of things.

  7. Balaji says:

    I use both computershare and loyal3.com. Loyal3 doesn't have comprehensive list like computershare but all the stocks purchased have no fees, for example you can purchase Pepsi and Coke with no fee from Loyal3. Anyone using Loyal3?.

    1. Balaji says:

      Yes, it also has Hershey, Kellogs etc. these are some of the stocks Tim has in Master List. Combination of Computershare and Loyal3 will cover good amount of stocks Tim has in Master list with no fees.

  8. Coleman says:

    In my opinion, Vanguard is the best option available. $2.00 commission one way, and free dividend reinvestment. You can initiate a electronic bank transfer and the funds will be in your account the next day. I believe this can be automated. Plus their mutual fund fees are the lowest. The only downside is that they don't have a trading platform.

  9. Daniel says:

    Fidelity's fees limit my trades to about $800 to cut down that percentage eating into my YOC, but they do offer free div reinvestment for all stocks. I add smaller amounts ($50-500) to mutual funds that are free of frees while saving up to make the larger stock purchases. Not ideal, but it works…and I like their platform/format.

    1. Tim McAleenan says:

      In effect, it means you pay $50-$75 at a site like Moneypaper to buy the first share, which automatically transfers to Computershare and lets you buy companies for free (or whatever the prospectus) indicates from there.

  10. Ronn says:

    Great blog- and great site overall! He's a good nubie question: I went to ding up on computershare and it didn't recognize any of my stock holdings (all of which are through tiara/xref or Edward Jones- thus I assume they are nit in my name). Any way around this?

    Thanks,

    Ronn

    1. Tim McAleenan says:

      Yeah, you'd have to transfer your ownership from Edward Jones to Computershare. Contact Edward Jones to let them know. They might charge a fee or ask you a couple questions to try to keep you on, but remember: (1) if your product is superior, you don't have to charge people fees because you fear them leaving, and (2) it's just a random customer rep doing their job, and don't feel intimidated dealing with any advisor's attempts to keep you as a client.

  11. Peter says:

    Tim,

    You can transfer share(s) for free to transfer agents like Computershare using Scottrade. All you need to do is pay the standard $7 commission for that one share, then fill out the DRS transfer paperwork. Like magic, your share shows up in Computershare, Wells Fargo, etc. in about a week.

    -Peter

    1. sdb says:

      One caution about Scottrade and DRS (Direct Registration System) transfers. Wath for fees. Scottrade changes their fee structure all the time and I have never seen any notice of the change.

      I've been with Scottrade since about 2001 and in that time I've seen DRS go from no fee (like it is now), then fee only for outgoing, then fee for both directions, then fee only for outgoing and now back to no fee.

      Scottrade currently charges a fee to deposit certificates, so I'm glad I deposited the last of mine a couple of years ago. 🙂 It makes more sense to me to charge money for accepting a certificate than accepting a DRS, but several years ago after they charged me $50 for an incoming DRS I got certificates from CompuShare and deposited those at no charge instead for a year or two. (I used to do quarterly transfers from an employee stock purchase account to Scottrade.)

      Just keep an eye on the fees…

  12. Kyle says:

    Tim,

    Great article and great advice as usual. I have been using computershare (COP, PG, SO) or buying directly from company websites (SCG) for a few years. It makes investing/saving very easy. I would say the only downside is that when stocks take a dip and you want to add to your current position, it can take about 5-7 business days before its processed and by that time the stock has already made some ground (or you could get lucky and has continued to slide). Thanks for all the advice.

    -Kyle

  13. ChrisW says:

    Hi Tim,

    Great article and awesome blog. I'm a little late getting started with the concept of building wealth to escape the rat-race and the site has been a great resource for me so far. I'm building a comprehensive plan now of how I'm going to structure my various accounts and whatnot and had a follow-up question on Computershare based on this post.

    In doing some research, I've seen a ton of negative reviews/comments online in regards to Computershare. I generally always take complaints people make on the internet with a grain of salt for (seemingly) obvious reasons. However, in the case of Computershare I don't see even a minority of positive feedback to balance it out. I see horror story after horror story of lost money, poorly timed buy/sell activity, inability to terminate DRiP agreements, etc. This article is one of the few sources of positive feedback. How has your experience been in relation to "administrative" aspects of Computershare? I understand that the programs are great considering the lack (mostly) of any fees and the automatic nature of the investment growth. But how is it in terms of managing those positions (cashing out some or all of a position in a company, dropping the DRiP if fees creep up out of the comfort zone, moving shares to a traditional brokerage account later on, stopping the DRiP so that one could acquire the dividends for living expenses)?

    Still being in the early stages of my foray into all this (and being an avid planner), I'm really interested in finding the platforms and products that best fit my service expectations and my needs going forward. Any feedback would be great!

    Thanks,

    Chris

    1. Tim McAleenan says:

      Chris, I am a galaxy away from the people that have had poor experiences with Computershare.

      Personally, I've had no problem buying stock or selling stock in accordance with my wishes, and Computershare has been a perfectly fine transfer agent for me. I have had no problems to date.

  14. AaronFunding says:

    I am very curious as to any reply anybody has to ChrisW. I have opened accounts with both ComputerShare and Loyal 3 in the past month. Loyal3 was quick and easy, investment began right away, accounts confirmed and email confirmation was quick. And easy read accounts, downside for me is no statements by US mail, only online.

    ComputerShre was set up first and I am still waiting for a snail mail statement so I can complete the opening of my account and make additional purchase in other companies.

    So the score is Loyal3 over CompterShare 15-0, so far.

  15. Jonathan says:

    Does anyone know if there is a way to get Cash Dividends on Loyal 3 without selling?

    I cannot find the answer on the website or Google.

    Tim, Love the articles. Opened XOM, WTR and AEP with ComputerShare and HSY,DPS,KO,UL,MSFT,DPS with Loyal3.

    Thanks!

  16. henry says:

    For any Canadian reading, Computershare and Canada Share Transfer are the two Agents handling most of the Company DRIP's & SPP's. Computershare also allows Direct Debit from your bank, eliminating even postage.

    For a broker I prefer ShareOwners Investment Inc. The automatically re-invest the dividends for any amount (even pennies) and to 4 decimals in shares. Their fees are abit higher, but do have co-op buys at $9.95.

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