DSPP

A Direct Stock Purchase Plan (DSPP) refers to a plan that allows investors to purchase stocks directly from a company, instead of going through a broker. Generally, investors buy stocks through brokerage firms like investment platforms or banks where these brokers serve as a middleman between the investor and the company that owns the stock. 

Some companies that offer these plans make them available directly to retail investors, while other others hire transfer agents to manage DRPP investments. Furthermore, DSPPs usually have low fees and sometimes allow investors to purchase shares at a discounted price. 

It should be noted that not all companies provide DSPP and these programs can sometimes carry specific restrictions that allow investors to buy the stocks only in specific periods. Furthermore, the plans have become less popular over the past years as brokerage firms reduced fees and became significantly more convenient. On the other hand, DSPPs may still be a better choice for long-term investors who have limited capital available. 

Just like investing through a broker, investors make DSPP purchases by transferring funds from their bank accounts. On the other hand, DSPPs often have minimum investment requirements, which means that there is a minimum number of shares investors must buy for each purchase. 

Go back to our full glossary.