They're not for all companies, of course. Phoenix-based Viad Corp., the former Dial Corp, is ending its program because the administrative costs were so high. Customer loyalty isn't a factor in its case because it markets its services to other businesses, not individuals. Carlson and Nelson recommend that investors assemble a mix of companies among different industries. You can find out whether a company has a dividend reinvestment plan or direct stock purchase plan by calling its investor-relations department or by consulting one of the sources in the accompanying chart.
Experts warn investors to scrutinize plan fees.
Many plans, especially newer ones, have been criticized for hefty fees on everything from opening an account to reinvesting dividends and buying more shares. The Moneypaper, for example, doesn't recommend IBM's plan because of its high fees, Nelson said. They're best suited for investors who do their own research on companies.