You pay a one-time fee to get enrolled, and for many fine companies, you will never again pay another dime when you buy stock in the company. In other words, every dollar you invest goes directly into your investment, which doesn't get diluted with extra charges. You cut out the middle-man, and this is particularly important if you are a small investor. After all, by making small, regular investment in several differ-ent companies through a broker, the commissions might account for more of the investment than the stock itself. About 1,300 companies, many of them among the finest companies in America, assist shareholders by giving them the option to buy additional shares in this way.
Plans vary with the companies, but they make investing very easy.
Once you are enrolled in a company's DRIP, you can make additional investments by sending funds to the transfer agent with the tear-off portion of the statement that you will receive after each investment. They can be sent by check, or by money order, and a growing number of companies will now also debit funds automatically from the investor's bank account. This makes a lot of sense because, after all, the logical time to invest in a company is when prices are down. As long as a company's prospects appear good, you should take advantage of dips in the market. Such a systematic approach to investing will reward the patient long-term investor.