The first thing to understand about DRIPs is that your shares will be held by a "transfer agent." My two favorite transfer agents are Computershare and BNYMellon. If you're interested in starting a DRIP, I recommend you go directly to their sites and see if any of the stocks on your watch list can be purchased directly through them for initial setup.
A few examples of stocks that can be purchased directly through these transfer agents are:
Purchased directly through Computershare:
* Exxon Mobil (XOM)
* Lowe's Company (LOW)
* Pfizer (PFE)
* Wal-Mart (WMT)
Purchased directly through BNY Mellon:
* Conoco Phillips (COP)
* Health Care REIT (HCN)
* Limited Brands (LTD)
* Pepsico (PEP)
* The Bank of New York Mellon (BK)
* The McGraw-Hill Companies (MHP)
Another popular transfer agent is Wells Fargo.
Many transfer agents require you to have an initial share before enrolling. When this is the case, I prefer to use Directinvesting's site to establish my first share. Direct Investing will coordinate the initial stock purchase and administrative setup with the stock's transfer agent.
Starting DRIPs can be a little time consuming because it will take you some time to find those DRIPs that are low fee or no fee. Additionally, it will take you some time to find the cheapest means of starting a DRIP. Basically, expect to spend $10-$30 to start a DRIP.
My favorite DRIPs that I hold are (Stock - Transfer Agent):
Johnson & Johnson (JNJ) - Computershare
Wal-Mart (WMT) - Computershare
Exxon Mobil (XOM) - Computershare
Lowes (LOW) - Computershare
3M (MMM) - Wells Fargo
RPM (RPM) - Wells Fargo
Aflac (AFL) - Aflac
Southern Company (SO) - Southern Company
Dow Chemical (Dow) - BNY Mellon
McGraw Hill (MHP) - BNY Mellon
Each of the above DRIPs have no or low cost methods of reoccurring investment.
I went a little overboard and bought a lot of DRIPs. The following are DRIPs that also offer no or low cost reoccurring investment. I continue to hold these and will only buy more if their earnings improve (Stock - Transfer Agent).
Alcoa (AA) - Computershare
Illinois Tool Works (ITW) - Computershare
Manitowoc (MTW) - Computershare
Baker Hughes (BHI) - BNY Mellon
Harris Corp (HRS) - BNY Mellon
Limited (LTD) - BNY Mellon
Manpower (MAN) - BNY Mellon
Sherwin Williams (SHW) - BNY Mellon
Cummins (CMI) - Wells Fargo
Pentair (PNR) - Wells Fargo
Graco (GGG) - Wells Fargo
Overall, I hold about $15,962 in DRIPs that have a net dividend yield of 2.7%. This gives me a current annual dividend of $431.56. I intend to continue to grow this portfolio until it reaches a level that will offer significant dividend income in retirement (at least $4000/yr). Right now, I'm investing about $300 per month and will ratchet this reoccurring investment up periodically as our household income increases and as we pay off our investment properties.