Important Note: Below you will find the first several pages of an in-depth 25-page special report -- Best Dividend Reinvestment Plans in America. In addition to educating you on the advantages of DRIPs, this report will show you how to put the power of DRIPs to work for you -- in ways and in stocks you may have never considered before. We sincerely hope that you benefit from the following investing ideas and analysis. Although we're happy to provide you with the initial few pages of this report free of charge below, please note that to read the full version of this report, you'll need to take action in one of the following ways: Gain immediate access to this report when you sign up for a subscription to Carla Pasternak's High-Yield Investing newsletter. Visit this link to learn more about the subscription options for that publication and view a listing of reports available with each subscription term. If you've already gained access to this report through a recent subscription, then you will now be able to review this report in its entirety. Note: If you're already a paid subscriber and would like to view a complete listing of all reports and courses you have access to, please visit this link.

Best Dividend Reinvestment Plans in America

Considering that most subscribers to High-Yield Investing have been around the stock block a few times, you probably either already participate in a Dividend Reinvestment Plan (DRIP) or at least know they've got nothing to do with leaky faucets and everything to do with turbo-charging your wealth.

Many publicly traded U.S. corporations offer DRIPs as a way for their shareholders to acquire additional shares at a very low cost. DRIP plans enable investors to automatically take any dividends paid by a particular firm and invest those funds back into the company's stock, often at a discounted price.

If you're like most investors, then you probably aren't fully aware of the more than 1,000 companies that offer these wealth-propelling plans because the Securities and Exchange Commission (SEC) doesn't allow them to advertise their DRIPs, except to existing shareholders.

Since DRIPs don't generate big, juicy commissions or fees to brokers, fund managers or other Wall Street middlemen, sometimes you have to take out your shovel and do a good bit of digging to find the information you need. Of course, given that they pack a powerful one-two punch of growing wealth at little cost, DRIPs are well worth the effort. And because you now belong to High-Yield Investing, the good news is that we'll do all the digging and heavy lifting for you.

Articles about the basics of DRIPs -- what they are, their value, how to get started, where to invest in them -- are a dime a dozen. You'll soon find, though, that this special report offers far more value thanks to the exclusive names, ticker symbols and profiles of some of our favorite individual DRIPs.

A CLOSER LOOK AT DIVIDEND REINVESTMENT PLANS

Income Investors Take Note
These may very well be the most challenging times income investors have ever had to endure. Even during the longest bear market in history -- you remember the one that began in March 2000 -- bull market bonds dished out healthy yields for investors smart enough to seek safety. By contrast, those who rode out the bear in tech stocks suffered unrecoverable losses.

Today, even after the multi-year interest rate-raising crusade by the Fed, bond yields don't deliver what it takes to make retirement assets last. They definitely don't have the firepower to make your money grow.

Still, the worst thing an income investor who lost precious time and assets in the bear market (even if you escaped with smaller losses) can do is roll the dice and take on way too much risk. On the contrary, you can't stuff your money under the mattress or stick it in a money market account either (both pay about the same amount).

So, when faced with tough decisions regarding where to place their hard-earned money, what are income investors to do? We suggest investing in dividend-paying stocks and using DRIPs to turn your portfolio into a fine-tuned moneymaking machine.

Short of FDIC-backed securities, there's no question that dividend-paying stocks are the least volatile ones to own in your portfolio. In fact, they tend to contribute little more than 10% of the volatility of the market as a whole while still managing to beat the market's total return.

A look back at the past 75 years shows that nearly half of the market's total returns have come via dividends. Between 1926 and 2003, dividends contributed 42% of the total return delivered by the S&P 500. Calculations show that $1,000 invested in the S&P 500 in 1926 would be worth $2.3 million today if reinvested dividends are included, but only $90,000 without the dividends!

Many dividend-paying stocks are big blue-chip companies with stability, value and proven track records. Historically, their products and services generate tremendous cash flow -- cash that they then pass on to shareholders in the form of dividends.

Here's a brief reminder of how dividends work: A dividend is a distribution of a company's earnings to shareholders. They are paid periodically on a per-share basis. So, the more shares an investor holds, the more dividends he or she receives. Investors can do one of two things with this money -- they can spend it on gas or food or fun, or they can use it to buy more shares. Investors who choose to buy more shares are reinvesting.

Even More Bang For Your Dividend Buck
Until 2003, dividends were taxed at the same rate as ordinary income, up to an extremely high rate of 38.6%. Capital gains, on the other hand, were taxed at a 20% rate. This discrepancy led many investors to opt for high-growth, non-dividend-paying stocks in the roaring 1990s so they could give Uncle Sam less and keep a larger chunk of gains for themselves. Now, thanks to a recent tax change enacted in 2003, the same 15% rate applies to both dividends and capital gains.

As a result of the tax change, many companies have boosted dividend payments to attract more shareholders. Not surprisingly, the selection of dividend-paying stocks to choose from is now better than ever.

Systematically investing in high-quality stocks for the long term and reinvesting the dividends is one of the best ways to build wealth and to ensure it will be there when you need it most.

That's why DRIPs are such powerful wealth-builders. By pouring your dividends back into more shares, DRIPs make it easy to harness the miraculous power of compounding. The beauty of compounding is that any little smidgen of money you can put to work now -- no matter how small -- can have an extraordinary effect on your wealth down the road.

Take a look at this example: Let's assume you purchase 1,000 shares of a stock with a share price of $10 (for a total initial investment of $10,000). Let's also assume that this stock offers a 9.4% annual dividend and steady +10% share price appreciation each and every year. Because this stock's growth rate (10%) exceeds its dividend yield (9.4%), it's only natural to assume that capital appreciation would play a more important role in the stock's total returns over the long haul -- right?

Well, if you thought this way, then you'd be dead wrong. Without dividends reinvested, after 30 years this $10K would turn into $344,581. That's a respectable gain, but you'd still end up with just 1,000 shares. With dividends reinvested for 30 years, however, that initial $10K would be worth over $2.5 million. Best of all, you'd own nearly 15,000 shares. At year #31, those 15,000 shares would be generating $242,900 in annual dividend payments alone!

The bottom line is that dividends matter big time. And reinvesting the dividends earned from high-yield stocks matters even more. As you can see from our example, when you invest in companies with abnormally high dividend yields, you can make staggering profits. In fact, your dividend check can eventually grow so large that it surpasses the original price you paid for the stock. The exhilaration of "lapping" your stock that way is a feeling you'll never forget.

Think about it: When you keep your interest payments in a bank savings account, earning interest on the interest income, you're able to compound your gains over time. In a sense, you end up getting a higher yield than if you had withdrawn each month's interest payment. In the same way, if you use your dividend payments to purchase additional shares, then your investment will grow and pay even more dividends over the long haul.

DRIPs: The Good, Bad and Not-So Ugly
The main advantages that DRIPs provide are centered on cost savings. More specifically, DRIPs can help you avoid unnecessary transaction costs in the following ways:

• You don't need a large sum of money to get started. In fact, in many cases all you need to do is purchase one share of stock.
• Your dividend payments are automatically reinvested free of transaction costs (or in some cases for just a small transaction fee). A few companies even allow you to reinvest those dividends at below-market prices (this discount can run anywhere from 1% to 10%).
• You can purchase shares of stock directly from the company without having to go through your broker. Some DRIPs also allow you to set up regular automatic deductions from your bank account. This is particularly helpful if you're interested in investing small sums of money -- say $20 or $100 -- on a regular basis. Without the benefits of a DRIP plan, investing such small sums on a regular basis would lead to high transaction costs.

Dealing Directly With a Company
Thanks to their growing popularity, about 10% of U.S.-traded stocks now offer DRIPs for their shareholders. Anytime you can bypass brokers (and broker commissions) and buy stocks directly from companies, it's a money-saving endeavor. If you already own shares registered in your name, and the company offers a DRIP, then all you need to do is call the company's investor relations department and sign up.

Once you sign up, instead of receiving a monthly or quarterly dividend check, you will automatically receive a fraction of the shares covered by the payment. For example, a $10 dividend payment will buy you two-and-a-half shares of a $4 stock. Although the gains may appear small at first, over time the total number of shares you can accumulate by reinvesting dividends may surprise you.

Third Parties
Of course, that's all well and good, but what if you don't own shares in a company but would still like to participate in its DRIP?

You can purchase initial shares from a third-party company such as Netstockdirect.com; or The National Association of Investors Corp. (NAIC). Both will purchase the shares for you and will enroll you in the plan. Some may charge you a few pennies per share when you buy. In addition, some permit automatic regular purchases, taking money directly from your bank account.

For example, for $7 plus the price of one share, NAIC will enroll you in your DRIP of choice and will allow you to add to your shares regularly at little or no additional charge. However, you need to be an NAIC member to take advantage of this service, and the annual fee is $39.

While many of these plans are great bargains, others might not be worth it, depending on your circumstances and their fees and policies. We strongly suggest that you examine the particulars of each plan you're interested in before deciding to enroll.

Using A Brokerage
If you're looking for an even easier way to reinvest your dividend checks, then you'll be happy to learn that most brokerages today offer investors the opportunity to reinvest their dividends regardless of whether or not the company actually offers such a program.

For example, most online discount brokerages now enable you to easily reinvest your dividend checks by simply checking the "reinvest dividends" box on their web sites. Meanwhile, other brokerages may have representatives available to assist you (sometimes for a minimal fee).

Here's Ameritrade's onsite policy: "Ameritrade offers dividend reinvestment on certain securities. The list is growing every day, so we will need to know which stocks you are interested in to determine if they are eligible. Please call a Client Services representative at 800-669-3900 to see if your security is eligible for dividend reinvestment. There is no charge for this service."

In other words, with some brokerages you can be well on your way to reinvesting dividends with just one simple phone call.

Charles Schwab is equally DRIP friendly. If you trade through a Schwab account, then all you need to do is:

1.)  Visit their web site and go to the "Positions" page.
2.)  Click on the "Yes" or "No" listed under the "Div Reinvest" column for your selected position.
3.)  Select "Yes" or "No" under "Reinvest Dividends?" for the selected position.
4.)  Click on "Submit" to submit your instructions.

To Schwab and Ameritrade's credit, they will reinvest your dividends for free. You'll find that many other discount brokerages will do the same. Just call and ask a representative how to enroll. You'll also want to make sure to inquire about the fees associated with doing so.

High-Quality Companies that Offer DRIPs
Now that you're familiar with DRIPs, the next step is to actually start taking advantage of these unique wealth-building plans. One way to do so would be to simply enroll many of your current stock holdings into DRIPs. The other way is to actively seek out new high-quality stocks and funds that offer DRIPs.

In an effort to steer you in the right direction, we're going to dedicate the remainder of this report to an analysis of several individual companies and funds that offer DRIP plans for their shareholders. In choosing these investment ideas, we looked for stocks and funds that not only offer DRIPs, but that also met a host of other stringent fundamental criteria. These include long dividend track records, reasonable payout ratios, strong cash flows, stable earnings profiles, and a host of other important factors that our research staff looks for in a quality income investment opportunity.

Please note that the reminder of this report is available exclusively to paying customers.
In it, our research staff devotes the next ten pages to the following topics:

An in-depth analysis of five high-quality individual stocks that offer DRIP plans for investors.

Important Note:  To gain access to the remainder of this report today, you'll need to complete one of the following steps: Gain immediate access to this report when you sign up for a subscription to Carla Pasternak's High-Yield Investing newsletter. Visit this link to learn more about the subscription options for that publication and view a listing of reports available with each subscription term. If you've already gained access to this report through a recent subscription, then you will now be able to review this report in its entirety. Note: If you're already a paid subscriber and would like to view a complete listing of all reports and courses you have access to, please visit this link.

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Thanks for reading today's special report -- Best Dividend Reinvestment Plans in America!

-- Research Staff
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