How do I set up a Dividend Reinvestment Plan?

I have heard a lot about Dividend Reinvestment Plans (DRPs -- or Drips) an want to set up an account. How do I do this? Do I have to go through an investment firm?

If you have your shares held at a company like fidelity, they can take care of it for you. Otherwise, contact the shareholder services area of the company you own. They will tell you if they have a DRIP plan.

I've worked in the brokerage industry and all you have to do is call your financial advisor or the company that's holding your securities and make the request over the phone. You will have to, in most cases feel out a DRP request form sign it and send it back to them (as every request is documented) and they will set it up for you. After that, as your divs hit your account, they will automatically be reinvested. Also, be sure to check the box that tells you now often you'd like to have it reinvested. Each security pay out dividends at different times. Some pay monthly, others pay annually and semi annually or quarterly, but which ever you decide, just be sure to review the form and check all the appropriate boxes.

Dude, don't do it. I was thinking about doing it but then it all made sense to me. Whether your dividend goes back to you or is automatically reinvested, you still pay the tax for the dividend.

So why do the DRIP if you don't exactly get the freedom with the cash sent to you dividend? What if the company doesn't look good anymore? Then you have to cash out and pay more fees like $25 and .13 a share.

Take the cash dividend and if you think the stock is still undervalued, then buy more shares. If you see a better deal then you have the freedom to pursue it.

The greatest investor of all time, Warren Buffet doesn't reinvest his Coca cola dividends! He gets his 200 million dollar dividends to invest in other, more attractive companies such as BNI.

Don't do the DRIP.