Friday, February 20, 2009

Dividend Reinvestment Plan (DRIP) Stock Screen

I'm a fan of Morningstar investment services. I frequently use it to justify when I invest in my current DRIPs. Here's my latest DRIP screen...

(1.) Dividend Reinvestment Plan (DRIP) Offered = Yes
(2.) Dividend Yield >= 2.2
(3.) Morningstar Economic Moat = Wide
(4.) Free Cash Flow - 1 Year > 0
(5.) Fair Value Uncertainty <= Low
(6.) Price / Fair Value <= 0.84
(7.) PEG Ratio <= 1.64
(8.) Return on Assets % - Trailing 12 Months >= 9.63
(9.) Net Profit Margin % - Year 1 >= 9.63

This screen gives me:
(1.) 3M Company (MMM)
(2.) Coca-Cola Company (KO)
(3.) Colgate-Palmolive Company (CL)
(4.) ExxonMobil Corporation (XOM)
(5.) Johnson & Johnson (JNJ)
(6.) Microsoft (MSFT)
(7.) Novartis AG (NVS)
(8.) PepsiCo, Inc (PEP)

I then went to TheMoneyPaper's website to screen stocks to determine if each DRIP offers direct investing or reoccurring investing for $1 or less per purchasing transaction. Here's the ones left over:

(1.) 3M Company (MMM)
(2.) ExxonMobil Corporation (XOM)
(3.) Johnson & Johnson (JNJ)
(4.) Novartis (NVS)
(5.) PepsicCo (PEP)

The ticker symbols link to The MoneyPaper's prospectus for each corresponding DRIP. TheMoneyPaper is generally my favorite starting point for purchasing DRIPS. I typically look at the prospectus for the "Agent Name." I then go to the Agent's website to see if it allows for the DRIP setup at a cost lower than TheMoneyPaper. If so, good. If not, then I determine how many DRIPS I want to buy. If it's a significant number, then I typically subscribe to a one year plan with TheMoneyPaper. This costs money up front but saves money on each DRIP setup.

At this point, I have what I consider too many DRIPS. I have 24 different DRIPS. The only reason that I have grown not to like having so many DRIPS is because I always move every three or so years with the military. It's a bit annoying doing so many address changes.

Of the final list, I already have DRIPS in ExxonMobil, Johnson & Johnson and 3M. I would personally avoid Novartis only because I already have a diversified Drug/Medical related company. I am considering starting a DRIP in PepsiCo.

4 comments:

Scott @ The Passive Dad said...

Coke has a great drip program. Unfortunately many of my drips are not performing to well but this could be an opportunity to buy more shares. Do you know if GE or Intel offer a drip program?

Finance Junkie said...

Thanks for the comment. I think I excluded GE or Intel from my screen probably because of the transaction fees involved with those two specific DRIPS.

Finance Junkie said...

GE doesn't charge anything for dividend reinvestment and charges a $1 fee for each autoinvest transaction. I would consider GE once housing prices appear to be stabilizing. Until then, I fear for the effect of Mortgage and Credit Card Backed Securities on GE's balance sheet.

Anonymous said...

How do I get started? Contact xom direct? Is there a website to facilitate this move?

Thank you