While some investors may feel comfortable owning one stock, Gerlach says people can diversify their holdings by purchasing in more than one company. There are two schools of thought here. Personally, I think you should diversify your portfolio with eight to 10 companies across a range of industries, and then invest regularly by choosing one or two stocks that seem to be the best values at the time. Obviously, determining which stock is the best value gets to the core of stock selection, but every investor needs a strategy with which he or she can approach the market. Simply picking random DRIP stocks isn't enough.
Some companies offer discounts on market price of shares.
An investor can contribute small amounts to purchase fractional shares. This makes it practical to invest in more expensive stocks. DRIPs allow investors to build a portfolio of stocks. By investing a set amount of money at regular intervals you can achieve dollor-cost averaging. Every individual has the affordable opportunity to invest in common stocks.