
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, January 31, 1994                   TAG: 9401280295
SECTION: BUSINESS                    PAGE: A-8   EDITION: METRO 
SOURCE: JANE BRYANT QUINN WASHINGTON POST WRITERS GROUP
DATELINE: NEW YORK                                LENGTH: Medium

PATIENCE, LONG-TERM GOALS HELP DRIP BUYERS AVOID SOAKING

If you're a tightwad stock investor, you've probably already thought about joining a Drip. That's shorthand for a dividend reinvestment plan. Some 900 companies offer Drips to individual shareholders (not mutual funds) who want to buy shares as cheaply as possible.

A Drip eliminates the stockbroker. You keep your company shares in the plan; when dividends are declared, part or all of the money automatically is invested in new shares. You often can buy at a 3 percent to 5 percent discount off the current market price.

Most Drips also let you buy shares for cash. Some plans charge you nothing to buy and sell; others ask for nominal fees. Either way, it beats paying normal brokerage commissions.

One important point is that Drips aren't for neophyte investors. You have to understand the company you've bought, believe in its business and intend to hold the shares long term. These accounts aren't for traders. They're for people with patience and long-term goals.

To join most company dividend reinvestment plans, you have to be a shareholder already. One share usually is enough, although a few plans require more. And the share has to be registered in your name; it can't be held in the name of your brokerage house. Here's how to get that magic share:

Look at the companies whose stock you own already. If some shares are in your name, and that company has a Drip plan, you can sign up right away. If the shares are in your broker's name, however, you'll have to have them transferred to you.

Buy a share on the open market. Many brokers won't take so small an order. Others will, at a charge of perhaps $35 to $40 at a full-service brokerage house and $25 to $35 at a discount broker. Consider that your price of admission.

Buy from an organization specifically set up to provide single shares to investors intending to open Drips, such as the National Association of Investors Corp., telephone (313) 543-0612, or First Share, (800) 683-0743, or The Moneypaper, (800) 388-9993.

Call the handful of companies that let you join their Drip plans directly, without first owning a single share. You'll find a list in the Directory of Dividend Reinvestment Plans, (219) 931-6480. They include such well-known names as Exxon, Texaco and W.R. Grace & Co.

by CNB