Trading is not a game of exacts. Perfectionists need not apply. Markets are made up of many irration...
DRIPs: The Easy Way to Invest
11/03/2006 12:00 am EST
For his subscribers who are looking for long-term investments with limited transaction fees, Charles Carlson often recommends vehicles such as Dividend Reinvestment Plans (DRIPs) and Direct Stock Purchase Plans (DSPs). The payoff is simple: Disciplined investing equals higher profits.
"Underlying the move to 12,000 in the Dow are some significant shifts in the market. One of those shifts is renewed interest in large-cap stocks. Another shift is a move to technology stocks.
"I've never been a big bull on tech stocks. Quite frankly, it's hard for me to get a handle on the business models of tech companies. Still, there's no denying that a number of tech stocks offer decent values. Furthermore, I think capital spending on technology will surprise people in 2007. And the move back into large-cap stocks should help some of the biggest tech companies. Of course, saying the time is ripe for a rebound in technology is one thing; choosing those stocks likely to benefit is quite another. To that end, a few tech stocks stand out as opportunities for DRIP investors.
"The last 12 months have not been kind to Intel's (INTC NASDAQ) shares. However, Intel has a history of big rebounds following periods of under performance, and I think the stock is cheap at current levels and should perform much better in 2007. Intel offers a direct-purchase plan whereby any investor may buy the first share and every share directly from the company. Its direct-purchase plan has a minimum initial investment of $250. Subsequent investments may be as little as $50. There is an enrollment fee of $10.
Purchase fees are $5 ($2.50 if purchase made with automatic investment) plus $0.10 per share. Selling fees are $15 plus $0.10 per share. Non-U.S. residents may participate. The
plan administrator is Computershare. For enrollment information call (800) 298-0146 or visit Computershare at www.computershare.com.
"Microsoft (MSFT NASDAQ) recently moved to a 52-week high, an encouraging sign for a stock that has been fairly dormant for the last few years. New products in 2007 should help revenue growth. Strong finances and continued earnings growth should fuel additional dividend growth. Microsoft's direct-purchase program permits initial purchases directly with a minimum $1,000. However, the firm will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $50. For enrollment information call (800) 842-7629 or visit the plan's transfer agent, Mellon Investor Services, at www.melloninvestor.com.
"Hewlett-Packard (HPQ NYSE) recently captured the top spot in the world for PC shipments in the third quarter. The company has a lot of operating momentum, which should translate into healthy earnings gains. While the stock has given a good account of itself over the last 12 months, these shares still trade at a reasonable valuation of less than 16 times consensus fiscal 2007 earnings estimate of $2.47 per share. The stock is a buy at current prices. Hewlett-Packard's dividend reinvestment plan requires ownership of at least 10 shares in order to enroll in the plan. If you buy the initial shares from a broker, make sure you get the stock registered in your own name, not the "street" name. Expect to pay the broker an additional fee to have the stock registered in your own name. Minimum optional cash investment in the plan is $50. The plan administrator is Computershare. For additional information on the Hewlett-Packard DRIP call (800) 286-5977 or visit Computershare at www.computershare.com."
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...
Matthew Kerkhoff, options expert and editor of Dow Theory Letters, continues his 14-part educational...