We all love discounts, I'm no exception. And while you won't find me waiting in line overnight for the new iphone or muscling through crowds on Black Friday, you will however catch me drooling over picking up some big name stocks below current market price.
Dividend Reinvestment Plans, or DRIPs for short, allow participants to automatically reinvest their dividends in order to purchase additional shares of a particular stock. In certain plans, the companies cover all of the fees associated with buying their stock, and listen to this, offer a discount on their shares purchased by the dividend!
So while you can buy shares of Aqua America Inc (WTR), on the open market at the current market price, myself and others choose the lesser-known route and pick it up for no fees and at a 5% discount using their DRIP.
Taking advantage of certain DRIPs offers the ever famous "dollar cost averaging" method of investing except with an additional advantage- the share price discount. This accelerates the "snowball effect" of compound interest potentially giving your portfolio a juicy boost over the long run.
The more shares you own, the more dividends you receive. And at a 5% discount using a simple rough mathematical example, you'll eventually own 20 shares for the approximate price of 19.
Now before you start to feel like a sucker and call your broker to ask why you're not on the DRIP train- read below to see how can climb aboard quite simply all by yourself.
Many companies offer DRIPs, but not all offer "no fee" DRIPs. And even fewer offer "no fee" DRIPs with discounts. Listed below is information on four of these beauties and where to get more information.
1. Aqua America Inc. as of 12/2017 offers "no fee" DRIP and 5% discount found here.
Founded in 1968, Aqua America Inc. is one of the largest U.S.-based, publicly traded water and wastewater utilities. It provides water and wastewater services through operation and maintenance contracts with municipalities and other government parties. Aqua America Inc. also operates in the natural gas drilling industry providing non-utility raw water supply services to drilling firms. Aqua America Inc. services roughly three million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, and Virginia.
And according to a recent Business Wire press release dated 12/22/2017, Aqua has six pending acquisitions under agreement with municipalities. The sixth of these is a newly announced municipality in Pennsylvania with 1,400 customers that came under agreement in December. President and CEO Chris Franklin was quoted in the same press release saying “As we move into 2018, we remain highly confident in our ability to deliver long-term value for our stakeholders while operating a sustainable and growing business focused on world-class service."
Aqua America Inc. has become a utility juggernaut boasting a current annualized dividend yield of 2.13% coupled with a steady long term appreciation of its share price. And considering the dependency we all have on the precious liquid gold we call water, this particular stock will give "buy & hold" investors the warm and fuzzies. Looking for a long-term defensive play? Put Aqua America Inc. at the top of your list.
I'll admit it. Before discovering Student Transportation Inc., I've never seen a school bus on the roads and thought to myself, "dividends". Normally I'm like everybody else and look to avoid the big yellow behemoths. And while I still do, I enjoy the thought of cash flow into my portfolio derived from a much needed service.
Looking to add a unique small cap income stock to your portfolio?
Student Transportation Inc. currently pays an annualized dividend yield north of 7%.
Student Transportation Inc. provides school bus transportation and route management services to both public and private schools in North America. The company offers contracted, managed, special needs transportation, direct-to-parent, and charter services. It currently services around 290 contracts with a fleet of 13,000 vehicles. The company delivers its services through drivers, dispatchers, maintenance technicians, terminal managers, and information technology professionals. Founded in 1997, Student Transportation Inc. is headquartered in Barrie, Canada and is currently listed on the NASDAQ with a $5.5 million market capitalization.
Based in Dallas, Texas, Energy Transfer Partners, L.P. operates in the natural gas midstream, and intrastate transportation and storage businesses in the United States.
And if the name sounds familiar, that's because the stock is held by many well known mutual funds and institutional investors. It's possible you already own a tiny portion of it if you hold any broad based funds or ETFs within your portfolio.
With a market capitalization of over $20 billion, Energy Transfer Partners, L.P. has approximately 8,500 employees, and owns or operates approximately 7,900 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas.
A lesser known bit of information about Energy Transfer Partners L.P. is that it also provides natural gas compression equipment and compression services, manages coal and natural resources property, sells standing timber, leases coal-related infrastructure facilities, and generates electrical power.
The company currently pays an annualized dividend yield of 13.34%.
This is one of those potentially lucrative Baby Boomer plays you hear investors talk about when they mention the famously large retiree population. And for the one or two people out there that have been living under a rock, Baby Boomers are the massively large post-war generation born been 1946 and 1964.
And according to the American Medical Student Association, the population of individuals over the age of 65 will increase by 73 percent between 2010 and 2030, meaning one in five Americans will be a senior citizen.
This is where Welltower Inc. comes into play. This REIT primarily invests in senior living and health care properties. It operates across the full spectrum of health care real estate, including senior living communities, medical office buildings, inpatient and outpatient medical centers and life science facilities.
The U.S. Administration on Ageing, Department of Health and Human Services recently reported that 7 out of 10 Americans over age 65 will need some form of long-term care in their lifetimes.
Welltower Inc. has positioned itself front and center to be a part of this long-term wave by owning and operating the critical infrastructure to this aging population of Americans.
With a market capitalization of $23.5 billion, 5.49% annualized dividend yield, and overall climbing long-term share price since public listing, Welltower Inc. is worth adding to your watch list.
Disclosure: I am/we are long STB, WTR, ETP, HCN.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: As with any investment, be sure to perform your own due diligence to ensure it aligns with your personal risk tolerance, goals, and time horizon.