When it comes to investing, most people dream of that scenario where they sock away a small sum and then return years later to discover that the money has ballooned into an amount that’ll make them wealthy — all without having to lift a finger. That kind of easy, attainable exponential growth is actually achievable through something called a dividend reinvestment program, aka DRIP.
DRIPs are offered to investors directly from the company, meaning you can bypass the commissions and fees associated with a broker. You even can opt to receive your quarterly dividend in the form of more stock instead of cash (that’s the crucial “R” component of DRIP: reinvestment). Taking more stock instead of cash is what creates that pattern of exponential growth; as your dividend increases because you own more stock, the amount of stock you own increases because your dividends keep getting reinvested. Some companies might even go so far as to offer a 1 to 10 percent discount on the market price of the stock included in these dividends.
It’s important to keep in mind that DRIPs aren’t perfect. More than anything else, they involve investing in a single company, which comes with greater risk than diversified investments, such as ETFs or mutual funds. And, there might be additional fees, depending on which company you settle on. As part of a well-diversified portfolio, however, DRIPs can be a smart way to expand your wealth exponentially.
Click through to see major companies to invest in that can help keep your money growing.
1. Aqua America
- Market Cap: $6.47 billion
- Share Price: $36.47
- Dividend Yield: 2.37 percent
Aqua America is a company that operates and regulates water utilities across the United States. The company’s 2.37 percent dividend is a healthy one, and they offer a 5 percent discount on the current market price for shares issued as dividend reinvestment.
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- Market Cap: $12.4 billion
- Share Price: $66.25
- Dividend Yield: 1.52 percent
Franco-Nevada Corporation is a gold royalty company, or a specialized bank that offers financing in exchange for royalties on projects from mining companies. With a 3 percent discount on shares when participating in its DRIP, you’ll be able to grow your investment with the company even faster.
3. Carnival Corporation
- Market Cap: $40.7 billion
- Share Price: $57.85
- Dividend Yield: 3.3 percent
Few things can match the enjoyment of relaxing on a cruise, and Carnival offers a wide variety of ships and locations to meet your demands. The only thing that might be more satisfying than a cruise is knowing that everyone else on the ship is helping boost the value of your DRIP account.
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4. Foot Locker
- Market Cap: $5.7 billion
- Share Price: $48.15
- Dividend Yield: 2.82 percent
If you’re a big believer in the sneaker business, a DRIP account with Foot Locker could be right up your alley. The company offers a solid dividend with a 2.82 percent yield, and there aren’t additional fees for setting up the account, processing ongoing recurring investments or reinvesting dividends.
5. Abbott Laboratories
- Market Cap: $121.6 billion
- Share Price: $68.10
- Dividend Yield: 1.56 percent
Pharmaceutical company Abbott Laboratories researches, develops, manufactures and markets medications for issues ranging from irritable bowel syndrome to migraines. The company’s stock offers a more modest dividend than some of the other companies on this list, but you won’t pay any fees until you sell shares.
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6. Agnico Eagle Mines Limited
- Market Cap: $8.6 billion
- Share Price: $37.37
- Dividend Yield: 1.25 percent
Agnico Eagle Mines is a mining company with mineral properties in three countries producing gold, silver, zinc and copper. Although the 1.25 percent dividend might not feel like you’re striking gold, the 5 percent discount on the market price of shares when purchased through the DRIP plan, could more than outweigh the feeling.
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- Market Cap: $206.9 billion
- Share Price: $358.11
- Dividend Yield: 1.77 percent
No company on the Dow Jones Index performed better than Boeing in 2017, and if you already had a DRIP with the aircraft maker, those gains would have proved your prudence. But, if you’re planning to start a DRIP now, keep in mind that the company charges a handful of fees — including a 5 percent dividend reinvestment fee — that could keep your investment from soaring skyward.
8. Leidos Holdings
- Market Cap: $9.8 billion
- Share Price: $64.75
- Dividend Yield: 1.9 percent
Leidos Holdings is a security company that’s primarily a defense contractor, supplying national security systems and services to the U.S. intelligence community and Department of Defense. If you’re looking to secure your financial future, a DRIP with Leidos — which is fee-free until you sell shares — could be part of the solution.
9. Archer Daniels Midland
- Market Cap: $27.3 billion
- Share Price: $48.67
- Dividend Yield: 2.62 percent
Agricultural commodities and products producer Archer Daniels Midland is a potentially strong pick for a DRIP account. The company’s 2.62 percent dividend yield shows a strong return that could fuel real growth over time. That said, it’s worth noting that the company charges several fees associated with the purchase and sale of shares, including a 12 cent-per-share purchase processing fee.
10. Capital One
- Market Cap: $43.4 billion
- Share Price: $90.94
- Dividend Yield: 1.67 percent
If you’re already banking with Capital One, it might be time to consider opening one more account in the form of a DRIP. Although the 1.67 percent dividend yield is nothing to write home about, the DRIP comes without any fees for setting up and maintaining the account — save for a $1 ongoing automatic investment fee.
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- Market Cap: $175.8 billion
- Share Price: $68.38
- Dividend Yield: 2.48 percent
Speaking of banks, you can invest in Citigroup and turn that healthy 2.48 percent dividend into a regularly growing pile of stock that could end up padding your retirement nest egg. However, even though that dividend is solid, the company’s DRIP charges several fees associated with purchasing and selling shares, including a 3 cent-per-share purchase processing fee.
12. Goldman Sachs
- Market Cap: $80.7 billion
- Share Price: $212.97
- Dividend Yield: 1.5 percent
It shouldn’t be a huge surprise that you can invest directly with any investment bank — after all, procuring investment products is its specialty. So, although Goldman Sachs’ 1.5 percent dividend yield is relatively modest, it comes with almost no fees for setting up and maintaining an account — save for a 5 cent-per-share purchase processing fee.
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13. Herman Miller
- Market Cap: $2.0 billion
- Share Price: $34.83
- Dividend Yield: 2.27 percent
You might need to sit down for this news: Not only does this company that makes comfy office chairs allow you to invest directly with it, but Herman Miller also offers a strong dividend yield of over 2 percent as well as a share price under $50.
14. Johnson & Johnson
- Market Cap: $359.1 billion
- Share Price: $133.84
- Dividend Yield: 2.69 percent
It can feel more like Johnson & Johnson “& Me” if you decide to invest in this massive consumer goods conglomerate. Doing so through the company’s DRIP program means that 2.69 percent dividend yield will probably return in the form of more stock. And, because the DRIP charges very few fees, you can be sure almost all of it will land back in your account.
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15. The New York Times
- Market Cap: $4.1 billion
- Share Price: $24.84
- Dividend Yield: 0.64 percent
The “Gray Lady” of American newspapers offers a DRIP that might be lacking in certain key aspects: The dividend yield of just 0.64 percent isn’t great, and the 5 percent dividend reinvestment fee will further eat into that return, potentially limiting the rate at which your investment can grow.
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All stock information is accurate as of the close of trading on Oct. 9, 2018.
About the Author
Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor.