Which Banks Act As Transfer Agents for Direct Stock Purchase Plans?
- A number of banks serve as transfer agents for direct stock purchase plans.stocks and shares image by Andrew Brown from Fotolia.com
Two large banks, BNY Mellon and Wells Fargo, remain transfer agents for direct stock purchase plans. Many banks dropped their role as transfer agents over the past decade, leaving much of the business to companies like Computershare. Transfer agents handle the details of stock ownership for companies they represent. They issue stock certificates and keep records of changes in stock ownership. Transfer agents often handle dividend payments and issue annual reports and other paperwork for shareholders. - Direct stock purchase plans allow an investor to become a stock owner in a company without using a broker. Avoiding a broker means cutting out brokerage commissions. While an actual stock certificate may be requested, the record of ownership is kept by the transfer agent, and dividends are paid directly to the shareholder. Additional shares of stock may be purchased through the transfer agent, often for free or with a nominal fee. Many programs offer free dividend reinvestment. Some companies allow regular monthly purchases through checking account withdrawals so stock owners can grow their holdings over time. Transfer agents also sell an investor's stock on request, usually for a small fee. Stocks are usually bought and sold at regular intervals, once a week or once a month, and not on demand, as a brokerage would sell stocks.
- BNY Mellon offers more than 100 direct stock purchase plans. Plans available include American Express, Bristol-Myers Squibb, Chevron, J.C. Penney, Staples and Starbucks. Overseas companies, including companies from South America and China, also offer direct stock purchases through BNY Mellon. The bank's Web site allows online purchases and transactions. Search for plans by minimum purchase, availability of electronic purchase, whether the company pays transaction fees and discount availability. Some companies provide discounts on the share price for regular purchases.
- Wells Fargo provides about 45 direct purchase plans. The companies offered include Allstate, Dollar General, Eli Lilly and Company, General Mills, Merck and Walgreen. The Wells Fargo Web site isn't as user-friendly as BNY Mellon's, and the only search feature is alphabetical. Still, with only about 100 total plans, including dividend reinvestment plans, it's not that hard to find the plan you are seeking. Click on a plan and you'll find a prospectus and purchasing information. Many of the plans allow online enrollment. Wells Fargo offers few international companies among their direct purchase plans.
