Closer look at DRIPs : investing in DRIP stocks is a conservative, cost-effective strategy

Money Digest, April, 2001

For a very long time, Money Digest has emphasized the importance of investing in Dividend Reinvestment Plans offered by stable, dividend-paying companies.

By investing in DRIPs you avoid commissions, let your dividend compound (as investment in shares) and, in many cases, are able to add more money in the shares of the company without paying any commission. These features make DRIPs particularly attractive to conservative, long-term investors. That is why Money Digest features in each issue (see page 7) a list of DRIP companies.

The current economic and stock market uncertainties make DRIP investing even more attractive. You can increase the value of your portfolio even more by diversifying widely and choosing well-run companies in different industry sectors. More important, you don't need to be a large investor to use this strategy.

Money Digest's contributing editor Patrick McKeough shows how you can start investing in as many as 20 high quality DRIP stocks for as little as $3,000.