Give a Gift That Can Keep on Giving-Stock Shares!

Giving A Stock Certificate!

In the 60′s and 70′s  giving grandchildren Savings Bonds was not a rare thing.  They are still available though the format has changed.

A recent article in the Wall Street Journal discussed an option for those who want to give something more substantial than a toy, tie, or trinket.    A share of stock-with the stock certificate!

Kelly Greene, the author of the article reviewed several websites, offering this service.

Stock Share Gifting Sites Online:

• Gifts of Stock- This site is simple and easy to navigate!  The tabs at the top of the page give the usual about “How it Works”, “Registry Benefits”, and “Stock Selection”.  They even have a “Registry Guide” for couples or grads to register-similar to registering at gift stores.
• One Share-This site is a little busier.  It lists different categories of potential recipients-such as Fathers, children, couples, and also has suggestions for each category.  I noticed Ruger or Harley certificate suggested for Dads.  A Coca-Cola stock certificate was suggested for the coke memorabilia collectors. A Martha Stewart Company certificate suggested for HER.  Sam Adams share certificate caught my attention!!! (caution-I like the beer, know nothing about the company!)  The certificate come pre-framed-so are more expensive than “Gifts of Stock” .
• Give a Share- This site is also easy to navigate.  It also comes with a framed share, but is less expensive than One Share-can’t comment on the quality of the frames on either site.  This site does a better job of price comparison of potential purchases.

I tried to do a cost comparison on a share of Microsoft, and it looks like the Gift of Stock site has the best price, because it doesn’t frame the stock certificate.  The Give a Share site seemed to be less expensive than One Share, but again, I can’t compare the framing quality.

The sites market these gifts as a “teachable moment,” especially for children.  The gift of the certificate can lead to a discussion about ownership of companies, and the way the stock market, and regular savings can build wealth.

All three sites will also register you with the companies Dividend Reinvestment Plan.  This is important because of the ease and low costs when investing through a companies Dividend Reinvestment Plan.

Dividend Reinvestment Plans:

What is a dividend reinvestment Plan, otherwise known as a DRIP?

DRIP’s are a way to buy additional shares directly from the company for zero or minimal cost per share. They allow the companies’ dividends (usually a quarterly payment to shareholders)  to be re-invested in company stocks automatically.

The advantage of this over buying from a brokerage is there is no commission.

And most brokerages will only pay you the dividend in cash-not with additional shares.  You can also buy smaller quantities of shares.  Most DRIP plans will allow a small dollar amount, rather than the usual 100 share minimum that most brokerages require.

Let me give you an example on how DRIPs work:

Years ago I served on a community board for Georgia Power.  They met with this voluntary board, of community leaders, asking questions about ways their company could be a better community partner.

We met several times over a couple of months time.  As a token of appreciation they gave each person that participated a “share” of Southern Company Georgia Power’s parent company) stock-worth about 12 bucks at the time.

Original Stock Certificate

But they also registered us in their DRIP plan.  Since that time  I have added a couple of thousand dollars of purchases usually in small sums.

Over that time, each dividend paid by that company has been added to my account as additional shares. The share price has also risen to the low-mid thirties

So my account is now worth about $14,000-about 3 times the amount I have invested.  This with almost zero cost of investing.

You could, over time, build up a diversified portfolio, of high dividend stocks at a very low cost this way.

What are the cons of using this method of Gifting Single Stocks:

• You are buying single stocks, which can be a risky way to invest.  See this post about single stock investing.  If you are just giving a gift-this may not be important.
• You need the Social Security number of the recipient, or you can buy a gift certificate, and the recipient can then contact the site with that information.  Gift of Stocks lets you notify the recipient of the gift and allows the recipient to give the personal information.
• Relatively expensive:  If you are giving 1o graduates a gift, you may not want to spend $75-150 or more per person.  If you have one grandchild-Go for it!  Same for a wedding gift. Make sure the price is in line with your spending plan.

Reader Questions:

What are your thoughts about giving single shares of stock, with the certificate?

Have you ever been given one, or received one?  Do you think this is impersonal or inappropriate gift?

Let me and my readers know your thoughts!!!

Tags: gift of single stock certificate, giving stock as a gift, giving stocks, stock certificate gifts

This entry was posted on Friday, June 18th, 2010 at 6:21 am and is filed under Wealth building. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.