Broker-free investing is an idea whose time has come

April 12, 1992|By Dick Marlowe | Dick Marlowe,Orlando Sentinel

Although it is not a brand-new idea, Exxon Corp.'s program through which first-time investors can buy the company's shares without going through a broker is getting a lot of attention for the emerging business of commission-free investing.

Although there are 900 companies that offer commission-free dividend reinvestment programs, known as DRIPs, Exxon has joined a more elite group of corporations that sell stock directly to investors, even if they are not already shareholders. More than 20 companies already do that, but the Exxon plan announced last month seems to indicate that broker-free investing is a good idea whose time has come.

Mobil, Texaco, Procter & Gamble and Johnson Controls are among the companies that have such plans. The interest stirred by the Exxon announcement, however, could be the beginning of something bigger. Under the new plan for the nation's largest oil company, new investors can get in with an initial purchase of just $250 worth of stock. Exxon also keeps the records and will even hold the certificates for safekeeping. In recent weeks, Exxon shares closed Friday at $57.875.

As with most dividend reinvestment plans, once you are in you can reinvest all or part of the quarterly dividends at no charge. Many dividend reinvestment plans also allow investors to make additional purchases up to specified limits. In the case of Exxon, the limit is pretty high. Investors can buy new stock every week to a maximum of $8,000 a month or $72,000 a year.

As with most plans, there is a commission when shares are sold, and sometimes a fee. For now, each is small compared with those charged by brokers.

Those who are interested probably will have to do some homework. Most brokers and brokerages would just as soon keep such opportunities a secret. But the Exxon deal is getting widespread national attention, and it is fairly safe to predict that other well-known companies will be joining the parade. Publicly traded corporations like to save money, and dividend reinvestment programs enable them to do so.

For more information on the Exxon program, call (800) 252-1800 -- but don't expect to connect on the first try.

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