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Dividend Reinvestment Companies

Dividend Reinvestment Companies. Which are the best dividend reinvestment plans to invest in?

Importance of Company Research

Investing in DRIPs successfully requires research into companies and markets. You need to invest in top-quality companies with a history of increasing profits and dividends. As you buy shares into these companies, you will become a shareholder of the company. Shareholders are rewarded with monthly or quarterly distributions of a portion of cash profits, known as dividends. The more shares you hold in the company, the more cash dividends you would be eligible for.

Undervalued or Overvalued

However, there is a critical difference you need to make when buying cheap companies. Some companies have top-quality management and have share prices that are simply undervalued by the market; other companies may have equally low share prices, but they may be overvalued if their company is poorly managed and about to collapse.

Best Dividend Reinvestment Companies

Here are the best dividend reinvestment companies as identified by finance specialist George Fisher. This list of best direct investing companies has been generated with the following criteria: Rated A+ by S&P, have a 10-year average annual return to shareholders of 20 percent or greater, increased dividends every year for the past 10 years:

Home Depot – 44% return over the past 10 years
Paychex – 44% return over the past 10 years
Pfizer – 30% return over the past 10 years
Wal-Mart – 29% return over the past 10 years
5th Third Bank – 28% return over the past 10 years
General Electric – 28% return over the past 10 years
InterPublic Group – 27% return over the past 10 years
Walgreens – 27% return over the past 10 years
Schering Plough – 25% return over the past 10 years
State Street Bank – 24% return over the past 10 years
Franklin Resources – 22% return over the past 10 years
Johnson & Johnson – 22% return over the past 10 years
Jefferson Pilot – 22% return over the past 10 years
SunTrust Bank – 22% return over the past 10 years
Illinois Tool Works – 21% return over the past 10 years
Merck – 20% return over the past 10 years

Historically Best Direct Reinvesting Companies

Well-managed companies reward long-term investors with dividend increases either in cash or additional stock. As Fisher notes, the 2000 S&P Directory of Dividend Reinvestment Plans list 247 companies offering DRIPs where dividends have increased every year for 10 years since 1989. These companies include AFLAC (AFL), Century Telephone (CTL), Disney (DIS), Federal Signal (FSS), Kimberly Clark (KMB), Pfizer (PFE), Pitney Bowes (PBI, Walgreens (WAG).

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