It is indeed possible to buy shares of a company directly from the company itself – avoiding typical transaction costs such as brokerage commissions.
Direct Purchase Programs (DPP)
Several hundred companies now offer direct purchase programs (DPPs) which allow an investor to buy stock directly from the company. These programs are also sometimes referred to as DIP’s (direct investment programs).
DPP’s allow investors to participate in the growth of a company with a very low capital investment. Through DPP’s investors are able to buy stock without commissions and can buy as little as one share in the company. Sometimes Direct Purchase Programs will have a service charge – although probably less than a brokerage commission.
How to get started with a Direct Purchase Program
Firstly you will need to find out whether the company in question offers a Direct Purchase Program.
While several hundred companies offer Direct Purchase Programs, the majority of publicly traded companies do not.
Dividend Reinvestment Programs offer a good alternative to Direct Purchase Programs for the companies that do not offer DPP’s.
Dividend Reinvestment Programs (DRP)
DRP’s are programs that may allow investors to buy more stock in a particular company without paying commissions. In order to qualify for the Dividend Reinvestment Program you will need to buy at least one share of stock in the company. Naturally, the stock must also be one that pays dividends.
Most DRP’s give investors the opportunity to invest through the plan to purchase more stock, normally without commissions. Once you are an existing stock holder you will qualify for the Dividend Reinvestment Program. You may have to have your broker issue a stock certificate in your name in order to become qualified for the DRP.
Optional Cash Payments (OCP)
Normally DRP’s will give the investor the opportunity to make optional cash payments (OCP’s). The DRP normally has a minimum and maximum payment amount. OCP’s allow an investor to slowly and regularly build on their investments without having to pay commissions.
Websites that help small investors buy stock in small quantities: