I recently purchased Enterprise Product Partners (EPD) as a part of my high-yield portfolio. The motivation for doing so was that EPD has consistently raised distributions for the past 14 years in a row. This MLP also features a 10-year distribution growth annualized at 8.30%.
In browsing its website, I noticed that it offers a dividend reinvestment plan (DRIP) that was initiated in 2003. A company DRIP is not rare; numerous companies offer one. I never had been very interested in these types of plans, since I could do the same thing through my online brokerage account for free with the click of a mouse button. What makes EPD's DRIP intriguing, however, is that dividends may be reinvested free of charge at a discount of 5% to the current to the market price. This discount is important because it increases the current yield, and continuous reinvestment of the dividends over time will significantly increase your yield on cost.
I've never actually participated in a company-specific DRIP before, but setting it up was straightforward. I called my online brokerage account and told them that I wanted to participate in EPD's DRIP. The brokerage called me back the following business day, and informed me that I was now enrolled in the plan. It wanted to make me aware of the following caveats:
- Shares will take up to a week to be added to the account instead of the typical one-day DRIP lag with my online brokerage account.
- The DRIP price may be higher (even with the discount) relative to the broker's DRIP price due to the fact that stock price movements may occur in between my online brokerage's DRIP date and the company DRIP date.
After acknowledging these conditions, I was enrolled in EPD's DRIP. Doing so required about 10-15 minutes of my time on the phone -- well worth it, in my opinion. I encourage readers to be cognizant of company-specific DRIPs out there which feature reinvestments at a discount.