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Newcastle Investment Corp. Message Board

  • stocksstink stocksstink Jun 27, 2013 11:06 AM Flag

    Scottrade's new DRIP program

    I know this isn't specific to NCT, but I thought maybe some of the participants here might have opinions on Scottrade's new "drip" program.

    After thinking about it, I believe it is okay. I know there are drawbacks such as no fractional shares and the re-investments only occurring among five stocks and just once a month. However, when I was setting up my accounts and decided NCT was a good choice for reinvestment at this level and this yield, I kind of liked it.

    Any other Scott trade users have thoughts on this?

    Sentiment: Buy

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    • Many companies encourage DRIPing with offers of a premium on the DRIP, i.e.: EDP gives you a 5 percent discount. That's a great way to increase your yield.

    • Personally, the plan is not for me. I have 10 -15 dividend paying stocks that I watch and invest in, and like to aggregate my dividends quarterly and use them to reinvest in the one that is the best overall value at the time, or to put into a new position that I have scouted. There is a lot to be said for the workmanlike approach of simply reinvesting your dividends over time -- it works like dollar cost averaging in a way. But I think that you can maximize your returns by acknowledging that your goose up your returns by putting in the effort to reinvest in the stock that you think has the best value at the your dividends come in.

      • 2 Replies to blakem7
      • Actually, that's what I like about the ST plan. Currently I have dividends collected during the current month going into 2 stocks (MIN and NCT), I can change next month and choose up to 5 in any ratio. (I believe you can set the reinvestment period to quarterly).

        Sentiment: Buy

      • A $1,400 investment in 100 shares of ConEd back in 1974 is now worth well over $100K, compliments of their DRIP. Only one of my better lifetime investments. I have about 1/2 of my 32 stock positions invested in those companies DRIP plans. The very best way to build wealth for the future.

    • I trade through Scottrade and have heard about their "drip" plan. Although I don't know the specifics of how it works I assume that essentially there is some mechanism to automatically reinvest dividends thus saving the commission (all of $7.00). In principle I think that dividend reinvestment is a positive approach for someone building their portfolio and after all $7.00 saved is $7.00. What I don't like about a drip is the automatic nature since I have found that with dividend paying stocks in particular, I can save far more than the $7.00 commission that a drip program will save me by buying shortly before, (in order to collect the dividend) or after the stock goes ex-dividend. Just a personal preference

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