Many companies allow you to buy or sell shares directly through a direct stock plan (DSP). You can also have the cash dividends you receive from the company automatically reinvested into more shares through a dividend reinvestment plan (DRIP).
Here are descriptions of the two different types of plans:
Direct Stock Plans — Some companies allow you to purchase or sell stock directly from them eliminating the need to use or pay commissions to a broker. But you may have to pay a fee for using the plan's services. Make sure to read the company’s disclosure documents before you enroll. Some companies require that you already own stock in the company or are employed by the company before you may participate in their direct stock plans. You may be able to buy stock by investing a specific dollar amount rather than having to pay for an entire share. Some plans require a minimum amount of investment or require you to maintain specific minimums in your account.
DSPs usually will not allow you to buy or sell your securities at a specific market price or at a specific time. Rather, the company will purchase or sell shares for the plan at established times — for example, on a daily, weekly, or monthly basis — and at an average market price. You can find when the company will buy and sell shares and how it determines the price by reading the company's disclosure documents. Depending on the plan, you may be able to have your shares transferred to your broker to have them sold, but the plan may charge you a fee to do so.
Dividend Reinvestment Plans —Instead of receiving cash dividends from the company, you may purchase more of a company's stock by having the dividends reinvested. You must sign an agreement with the company for this to be done. If you have a brokerage account or mutual fund, your firm may also have a dividend reinvestment plan. You should check with your firm or the company to see whether you will be charged for this service. Make sure to read the disclosure documents before you enroll.