Last week I received bad news about a dividend reinvestment plan (DRIP) that I’ve invested in for the past two-plus years. Procter & Gamble (PG), the consumer products giant and popular Dividend Aristocrat, switched its stock transfer agent and raised fees.
DRIP fees are the enemy of dividend growth investors. Those of us that track every penny we receive hate our pennies being salami-sliced out of our possession.
Procter & Gamble is using the opportunity to shift some of the cost burden to DRIP shareholders in the guise of a “best in class online experience”.
In a recent article, I wrote about my general move away from DRIP investing. Once a good way for investors to put money toward a stock by dollar cost averaging and reinvesting dividends, DRIP investing has become a bit of a dinosaur.
DRIP fee structures vary dramatically from company to company. The big transfer agents haven’t invested much in technology, so investing online still feels like it’s 2002.
Claiming a better “online experience” is a farce.
Initiated in April of 2014, my Procter & Gamble DRIP position has grown to 39 shares worth more than $3,000. I already planned to transfer my shares to TD Ameritrade but haven’t gotten around to it yet.
Now it’s a priority. I don’t need the aggravation of another online account or the fees. So first chance I get, I’m transferring my shares to TD Ameritrade, just like I did with 194 Verizon (VZ) shares and will do with other stocks in the near future.
This move by Procter & Gamble is a step back from a historically shareholder friendly company.
The most annoying part of the new Procter & Gamble DRIP plan is that management is trying to portray it as moving to a better platform, claiming Wells Fargo Shareowner Services has ranked slightly better than Computershare by some “independent tracking surveys”. As if that matters.
The only thing that matters with DRIP investing is fees.
So I decided to call management out and wrote an article on Seeking Alpha to expose the decision and to make sure investors understand the fees. The article is called Dump The Procter & Gamble DRIP.
Judging by the comments section, many Seeking Alpha readers share my distaste for fees and are revolting, moving shares out of their accounts. Others question DRIP investing altogether.
To help illustrate why a very low-fee DRIP can be an effective way to accumulate shares, I linked to my Procter & Gamble DRIP tracking spreadsheet in the article.
The sheet shows penny for penny how I accumulated 39 shares of stock and paid just $0.88 in fees over two years.
That kind of low-fee DRIP accumulation is impossible with the new transfer agent fees.
Please head over to Seeking Alpha to read the article. My hope is that it reaches as many investors as possible, as well as the Procter & Gamble Board of Directors and the management of other companies considering something similar. As of Tuesday night, the article reached 10,000 page views.
The trend in investing is lower fees, not more fees. Procter & Gamble got this one wrong.
Click the button below to check it out:
Disclosure: The author is long PG and VZ
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