Why am I surprised that Amazon (AMZN) is starting a direct purchase plan? For starters, the Internet giants have not been at the vanguard of the DRIP movement. In fact, they have been noticeably absent, notes Chuck Carlson, editor of DRIP Investor.

To see Amazon — arguably the giant in the field — implement a plan was out of the norm for this segment of the market. Second, nearly all companies that offer a direct-purchase plan pay dividends. Amazon does not pay a dividend, which was yet one more reason that I didn’t think the firm would start a plan.

Actually, the thought occurred to me that perhaps Amazon’s new direct-purchase plan is foreshadowing the implementation of a dividend in the not-too-distant future, but I still think that’s a long shot.

The funny thing is that while I am very surprised Amazon pulled the trigger and started a plan, it makes perfect sense on a number of different levels:

* The idea of “shareholder-as-customer” has been a driver for a lot of retailers, so it makes sense that Amazon, too, would want to develop a relationship with individual investors.

* Amazon is involved in so many retail and consumer services and so skillful in the digital world that the firm has almost a limitless number of ways it can monetize a shareholder base of individual investors.

* Amazon’s high per-share price makes it challenging for individual investors. Sure, you can buy mutual funds that own Amazon. But for direct exposure to the stock, it is not easy on the pocketbook to buy whole shares.

The company’s new direct-stock purchase plan is a game-changer in that now, investors can buy Amazon literally in pieces (fractional shares), thus making it easy to gain direct exposure to the stock and do it in investment amounts that make sense for your own pocketbook.

Should investors be buying Amazon right now? The stock is going through one of its rare price lulls. These shares have underperformed the S&P 500 Index over the last 12 months and are trading at a 14% discount to their 52-week high.

Nevertheless, the stock still trades at roughly 76 times 2019 earnings estimates and 54 times 2020 estimates. So it is hard to classify the stock as cheap. Amazon stock has never been cheap, however, which makes it challenging to evaluate these shares.

However, Amazon, in some respects, is a perfect stock to “dollar-cost average” into precisely because conventional valuation methods have not worked well on these shares. When you look at the macro picture for the stock, the future looks pretty bright.

The company continues to garner a massive share of online commerce. Its cloud services under its Amazon Web Services (AWS) unit is a monster. The firm has plenty of runway for expansion into virtually every market that touches consumers or is involved with commerce in general.

Quite frankly, the biggest risk to the company is probably Washington and regulators, who seem to be growing uneasy with the dominance of the big Internet companies.

I would love to buy these shares closer to their 52-week low of around $1,300 per share, and I think you could see that in a more severe market correction or the next bear market. But trying to pick a bottom in any stock, especially Amazon, is difficult.

For that reason, I would feel comfortable nibbling at current prices — and now with Amazon’s new direct-purchase plan, you can nibble for as little as $20 once you make your initial $250 purchase — and perhaps stepping up purchases on declines back to the $1,500-$1,600 level.

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