Type B Dividend Shares” sao tambem chamados de dividend reinvestment plans, or DRIPs.
The one rule of being a Type B Dividend Share investor is…
First of all, you need to understand that Type B Shares are exactly like regular shares of stock. You can sell them at any time – either back to the company you bought them from or through any broker.
They don’t cost any more than regular shares (they usually cost less). And you won’t have to fill out any lengthy paperwork or sign up to buy any more shares than you want.
In fact, you can buy just one share if you want. And yes…there is some paperwork, but it’s very straightforward, and no more complicated than opening any brokerage account.
According to the investment blog OwnTheDollar.com, “Most [Type B Share] plans are very easy to enroll in and most of the paperwork can normally be filled out under a minute.”
You might be wondering why a company would want to offer these types of shares?
In short, companies started offering these shares back in 1968, as a way to sell shares to regular investors. You see, back then, it was much, much more expensive to buy and sell shares of stock.
A typical transaction fee for 100 shares or less could be at least as high as $20 – which I don’t have to remind you was a lot more money back then than it is today.
So companies started offering Type B shares in order to tap into the HUGE market of regular people who wanted to own stock, but couldn’t really afford the transaction costs.
You might call it the birth of the Main Street investor.
Type B shares let Main Street investors buy shares cheaply while at the same time giving publicly traded companies easier access to more funding.
It was win-win…
Except for the brokers of course.
That’s part of the reason you probably haven’t heard too much about Type B shares – if you’ve heard anything.
Brokers and brokerage firms hate these types of shares.
You have to agree to reinvest any dividends the company pays you.
Esta e a unica regra de DRIPs
And as I said, there are currently over 1,000 companies that offer Type B shares – and more and more publicly traded companies are offering Type B shares every day.
In fact, in just the last half of 2010 alone, at least a dozen more companies started to offer Type B shares for the first time…