The shares of this mega-tech company are now available in a Direct Stock Purchase Plan.
Alphabet Inc. (GOOGL)
From DRIP Investor
Alphabet Inc. (GOOGL)—better known as Google—recently joined Computershare’s DirectStock online-only direct-purchase program. The company is the latest technology company to offer shares directly via Computershare’s DirectStock program. I’m particularly excited about Alphabet offering a plan for a variety of reasons:
• The company is one of my favorite technology firms. The company’s search business dominates the market, and its online ad business is huge and growing. I also like the company’s YouTube business and see big growth as the firm continues to monetize this asset.
• You can buy the hefty growth for a reasonable price. Indeed, the company should earn at least $56 per share in 2020, giving the stock a reasonable P-E ratio of 22 based on that earnings estimate.
• Finances are solid. The company has approximately $170 per share in cash on the books. Such financial firepower and huge cash flows can support investment in the company’s primary businesses as well as continue to invest in other opportunities, including self-driving cars via its Waymo unit. And while Alphabet does not currently pay a dividend, it is not a stretch to see the company offering a dividend within the next few years.
• The shares have behaved better in recent trading, with the stock handily outperforming the S&P 500 Index over the last three months. I expect that relative strength to continue through at least the end of the year.
Finally, Alphabet is the sort of high-priced stock that is a natural for a direct-purchase plan. Indeed, it’s not a stretch to say that for some investors, buying a single share of Alphabet stock via a broker is a non-starter given the four-digit price tag. Fortunately, you can buy fractional shares via the direct purchase plan, thus providing a more palatable option for investors who want to own Alphabet stock. True, if you are just investing the minimum to buy fractional shares, the fees in the online plan are quite onerous, so investors need to consider the impact of fees when investing in Alphabet, or any company in the DirectStock program at Computershare.
Bottom line: Alphabet is a “must have” stock for long-term investors, and its new plan makes it more attainable for all investors.
Minimum initial investment in Alphabet’s online-only direct-purchase plan is $25. Alternatively, you may authorize monthly automatic deductions of at least $10 each from your bank account to fund your initial investment. The subsequent minimum additional purchase amount is $10. Cash purchases are subject to a maximum annual amount of $250,000. Each dividend reinvestment will entail a transaction fee of 5% of the amount reinvested, up to a maximum of $5 plus $0.05 per share. The plan administrator is Computershare. For more on Computershare’s DirectStock program, visit www.computershare.com/directstock.
Charles B. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, November 2019