<THE DRIP PORTFOLIO>
Dripping on the Web
Home Depot Online
By George Runkle (TMFRunkle@aol.com)
Atlanta, GA (Jan. 11, 1999) -- When the World Wide Web first appeared, I was rather skeptical. There wasn't much content, most websites were rather shallow and seemed to be nothing but corporate brochures. However, before I knew it, the amount of information found on the Web began to increase drastically.
I researched graduate papers without ever stepping foot in the library. It became possible for us to access our bank account over the Web and pay bills. We started to access our credit card accounts the same way, and of course we bought things more over the Internet. Internet brokerage firms like E*Trade and Ameritrade have been edging out the traditional "full service" brokerage firms for a while now.
In this line of thought, let's look at how we usually invest in a Drip. Back in 1994, I thought all companies had Drips (they don't). I wanted to get started right away, so I just went ahead and bought four shares of a company's stock through my discount broker. Six weeks later, the certificate arrived, and I was ready to start the Drip. Too bad the company didn't have a Drip plan (oops!). After that fiasco, I got smarter and determined if a company had a Drip plan before purchasing the stock. I figured I'd just consider that $35 commission I spent to buy those shares in Microsoft as lost money.
Usually, if a company had a plan, you bought one share through a broker, and had the certificate sent to you. Then, you enrolled in the plan. It usually took six to eight weeks to get a certificate, and often that long to register the Drip account. Oh, and you didn't want to lose the certificate, it is a real hassle to replace. You can save money and some hassles by buying that first share through The Moneypaper, but it still takes time. Some companies are better; they let you buy the initial shares directly from them. Compaq, Exxon, Texaco are three that come to mind. They only require a $250 minimum to start, and there are no brokers, certificates, or hassles.
Lately, it's gotten even easier. We can now buy into a Drip through the Web. Last week, I bought my first shares of Home Depot (NYSE: HD) through the company's website. I never made out a check, or even filled out a form. I also arranged for direct contributions on a regular basis to be deducted from my checking account. How did this all work? Do I feel it was secure?
The stock purchase is made possible through Stock Power. Right now, the only company that takes advantage of this is Home Depot, but I'm sure we'll see others follow. To start the process, you log onto Stock Power through the Home Depot Web site, www.homedepot.com. As you begin, you download encryption software that further protects you from an unauthorized transaction. After this is done, you enter your bank's routing number and your checking account number. You choose a login name and password. Also, it asks for a credit card, where you are charged $5 to set up the account.
It's that simple. I have a Drip in Home Depot, and from this month forward, a regular amount will be deducted from my checking account and used to buy stock. I can do all the normal stuff for my account, buy, sell, or whatever all through the Internet. As far as I know, only Home Depot does this right now, but in time we will see more companies run their Drip plans in this manner. Who knows, maybe even Microsoft might get around to having a Drip on the Web some day, and those four shares (well, now it's sixteen after the splits) will do me some good after all.
The Fool is hiring. Answer the call.