Not the best title here, but who cares. OK, my last post brought up the question of what my DRIPs are. Instead of answering in the responses, I thought this deserved a lil post.
For some background ... there are different ways to look at investing, and getting the most bang for the buck. For the micro investor, its really hard to have a good plan. It turns out I have had a little plan in my mind, even if not really thought out. Maybe a week ago I read someone who was proposing that investing for yourself (preferably through DRIPs) would be the most cost effective for large cap companies, whereas mutual funds would be better for everything else (small cap, foreign, REITs, etc...) This is due to the cost of research and knowing what you are buying. For the little investor, it probably makes sense to stick with larger companies you know.
While I hadn't looked at it that way, that has been pretty much my strategy. I figure I can invest myself in the large companies, do it on the cheap, so even if my return isn't quite up to snuff, when you figure I don't pay any maintenance fees, I should come out ahead of most any large cap fund returns. I let my 457 plan get full of small cap growth funds, and international funds, and hope the managers know better than me what they are doing.
So, with that said, here is a high level view of what I have (Drip - Market Category):
Dominion Resources - An energy utility
Aqua America - A water utility
Disney - Entertainment
Home Depot - Durable Goods (I think)
Heinz - Food
Well thats the list, and they don't total $10k yet, so I'm no tycoon. I have been trying to diversify, looking for stocks with a good record of dividends in different market sectors. Its hard to do without tons of money.
Anyhow, banking is another area I wanted to start in, and Bank of America has good dividend rates, and most analysts are high on it right now. Some other companies (areas) I have wanted to get started in (at the right price) include Pfizer(pharmaceuticals), Johnson & Johnson (consumables?), Anheuser Busch (Food & Entertainment), Norfolk Southern or BNSF (Transportation).
One area you might notice isn't included is defense industry. That looks like a good area for now, but may falter down the road. But in any case, thats not why its missing. I have an old 401k from when I worked for a company bought out by a defense contractor, and their stock fund became a defense contractor stock fund. So it holds about $6k in their stock, and I am using it as a pseudo DRIP right now for defense stocks. Therefore I consider that area covered.
Some other notes here. J&J won't let you start a DRIP without already owning their stock (as well as Coke), so for now I have passed on trying to start DRIPs with them. Down the road... perhaps.
OK, any ideas here?
A Dripping plan
September 29th, 2006 at 01:38 am
September 29th, 2006 at 04:09 am 1159502968
They seem to have a firm grasp on the behind the scenes things, but without a solid understanding of taking care of customers and an insanely high attrition rate, they will inevitably lose a huge amount of business.
Disclosure: I am a former front line banking employee who worked for a (small scale, local) competitor of BoA. I am also currently looking for work at BoA competitors. I am NOT currently working in the banking industry, nor have I ever worked for BoA. These are just my observations based on what I have heard from others who work for BoA.
September 29th, 2006 at 10:52 am 1159527172
Love the water play and I'm thinking of doing my next drip in water myself. Another good company to look into is Waste Management (not sure if they do drip or not though). You sound a bit like me and want to cover the MUST HAVEs that consumers use daily, and towards that vein I'm looking towards funeral homes/cemeteries and grocers. And looking out toward aging boomers the nursing home/retirement home industry looks like it might be a decent play as well.
October 7th, 2006 at 06:05 am 1160201151
Have you seen Map of the Market? I like their visualization of how stocks in the S&P are doing, and it might give you some ideas.
http://www.smartmoney.com/marketmap/