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George said:
"After all, it makes little sense to start with a dozen Drips, only to later realize that we should be holding half as many."

While this is strictly true to the extent that you don't want to start 12 drip if you only really desire six, if you want 6 drips you should not assume you can start the exact number of drips you want - you very well need more. I have had two drips I had to get out of, both in the last 6 months and both after I had bought one share but before I could make even one optional cash payment. One of the companies simply cancelled their drip program. The second company switched from a fee free program to a very high fee program. This second problem also happened with one of the Fool's initial picks, Campbells (unlike the Drip Port, I sold right away)(and my stock wasn't Campbells - it happens more than we care to think about). If I only had 3 or 4 drips I would have been mighty discouraged if 2 had imploded right at the start.

This doesn't mean you should jump into a hundred drips, but if you would feel diversified with 5 stocks, perhaps you should look into getting 6 or 7.
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This doesn't mean you should jump into a hundred drips, but if you would feel diversified with 5 stocks, perhaps you should look into getting 6 or 7.

I'll disagree. The "problem" here is that, like me, you may select the right number of companies and have no changes to those selections over the course of several years. I would think that your situation would be the exception.

I believe that best is to go with the number you feel is right, and if conditions change, then make the changes. After all, it only takes a month or so to get started a new DRiP.

george
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Does anyone know the average life expectancy of a DRP program or how many fold each year (or how often fees are added or increased)?

Your experience may be the result of two things: Either you happened to pick the drips that were about to evaporate OR this is actually a probable event worth planning for, in which case I would take your advice about dripping more companies.

Mr. Ed
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Does anyone know the average life expectancy of a DRP program or how many fold each year (or how often fees are added or increased)?

I believe that Dave Fish may be able to help here. He can probably let us know what percentage of the MP63 turns over each year, which will be a somewhat close indication of the percentage of DRiPs that end or go to high fees.

george
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George,

Does anyone know the average life expectancy of a DRP program or how many fold each year (or how often fees are added or increased)?
I believe that Dave Fish may be able to help here. He can probably let us know what percentage of the MP63 turns over each year, which will be a somewhat close indication of the percentage of DRiPs that end or go to high fees.


I don't think that you can think of a DRIP as having a life expectancy since many of the earliest DRIPs are still around after 30+ years, although some, like AT&T, have gone to high fees. Even that, of course, isn't the "death" of that DRIP; it just makes it less attractive. The primary reason DRIPs end is that the company gets acquired, sometimes by another DRIP company. To the extent that mergers and acquisitions have picked up over the past few years, corresponding DRIPs have ended (or been transferred into the acquirer's DRIP). While I don't have a handy number, I'd say that more plans are being created than are disappearing.
As far as the MP63, we've made 38 replacements in 6+ years, although at least five were because of multiple-share requirements, a screen we later dropped. A quick count showed 13 mergers/acquisitions, 14 high-fee plan introductions, plus at least two de-conglomerations (ITT, Hanson). But I would also suggest that I think this group has had a higher percentage of changes than the broader DRIP universe, simply because it includes mostly high-visibility companies. The number is also a little misleading, since several replacement companies were the acquirers, so shares in the "old" company were replaced by shares in the "new" company. (E.g. BankBoston gave way to FleetBoston.)

Having said all that, I'd "guesstimate" that up to 100 DRIPs are terminated per year, mostly through merger or acquisition, but that 150-200 are created. Many of the most familiar names, though, have been around for a couple of decades, and DRIPs are more widely heared of than ever before, so their participation is as high as ever.

dave fish/moneypaper

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Amazing, I picked about 7 drips (roughly, I'm at work and can't think!) and you know, they are ALL doing well, ever since everyone started going nuts on the Tech Stocks, my drips have been GREEN lighted all the way (unlike my few Techs that are always red now!).

Haven't lost a DIME on any of them, which is rather cool for me, so I figure I've not quite well...now that I'm getting my $$$$ to invest more often! :)
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Hmmm. Perhaps the number of Drips an individual investor should hold depends on (1) how many stocks that individual can really follow on a regular basis; and (2) how much time he or she has (or even wants) to spend on keeping up with his or her DRIPs. Not just checking on charts, or the PEG--but on financials, estimates, comparisons with competitors, company-related and industry-related news and developments. If you can't keep up consistently with all the stocks you are dripping; you may have to trim back a bit.

Egerius
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