Direct Stock Purchase Plan

A Direct Stock Purchase Plan (DSPP) is a program that allows investors to purchase shares of a company’s stock directly from the company, bypassing traditional brokerage firms. These plans often offer advantages such as lower fees, the ability to buy shares at a discounted price, and the option to reinvest dividends to purchase additional shares.

Examples of companies offering DSPPs include:

• The Coca-Cola Company: Allows investors to purchase shares directly and reinvest dividends.
• ExxonMobil: Offers a DSPP with no brokerage commissions for purchases made through the plan.
• Johnson & Johnson: Provides a plan that enables direct purchases and dividend reinvestment.

In practical cases, an investor who wishes to acquire shares of a company may enroll in the DSPP, allowing them to buy shares at a set price without incurring standard brokerage fees. For instance, if an investor enrolls in a DSPP for a company with shares priced at $50 and the plan offers a 5% discount, the investor can buy shares at $47.50, making it an attractive option for long-term investors.