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DIRECT STOCK BUYING: A LOAD OF NEW NO-LOADS

Who needs a broker? First-time investors can now buy shares directly from the likes

of Ford, IBM, and British Telecommunications. Soon, they'll be able to scoop up Walt Disney stock, too. And by yearend, they may be able to purchase these shares online.

Individuals have been buying stock directly from a small number of public companies for years. But in less than a year, the number of no-load stock-purchase programs--including those of foreign companies whose shares trade here as American depositary receipts (ADRs)--has doubled, to nearly 300, and should reach 1,000 by 1999.

Investors are flocking to these programs because they allow anyone to buy shares without paying a broker's commission. Although you'll still pay some fees, the cost is less than if you used a broker. And minimum investments are surprisingly low: In more than half of the plans, you can invest $250 or less and as little as $10 thereafter. And unlike traditional dividend reinvestment plans (DRIPs), which many companies continue to offer, participation isn't restricted to existing shareholders.

IRA OPTION. The newest comers offer even more. Ford Motor, which launched its DirectSERVICE program in June, has a loan provision. Investors who own at least $2,000 worth of Ford stock can borrow up to 50% of the market value of their accounts. (The interest rate for the minimum loan amount of $1,000 is 1.75% above prime.) The auto maker also lets you open an individual retirement account (IRA) for your Ford stock, including dividends. Bell Atlantic, which unrolled its plan in March, offers a similar IRA option.

To administer an IRA, companies charge an annual fee of up to $35. Problem is, your retirement money is invested in just one stock. Some brokerages, such as Quick & Reilly and Fidelity, offer ''self-directed'' IRAs that let you invest in a broad range of equities. Their annual fee of $25 is waived if you meet account or asset minimums.

You can access updated lists of participating companies through a variety of sources (table). When you're ready to invest, either call the company or the Direct Purchase Plan Clearinghouse (800 774-4117) and request a free prospectus and enrollment form. Investors can also purchase no-load ADRs through Morgan Guaranty Trust's Shareholder Services or Bank of New York's Global BuyDirect. Most no-load stock programs are open to all investors. But some, particularly those operated by utilities such as Atlanta-based AGL Resources, are only available to residents of states in which the company operates.

Despite their no-load name, these plans are no longer no-cost. Most companies charge some type of administrative fee, says Charles Carlson, editor of the newsletter DRIP Investor and author of Buying Stocks without a Broker (McGraw-Hill, $17.95). Expect to pay a one-time enrollment fee of $5 to $15 and a per-transaction fee of up to $10--plus a few cents per share every time you buy more stock. (Fees may be higher when you sell.) Few plans charge an annual account-management fee, but you may pay up to $5 a quarter to reinvest dividends. Compare that to discount broker Charles Schwab: For a $1,000 stock purchase, you'll pay anywhere from $29.95 (using e.Schwab) to $47 in commissions and have to maintain a higher minimum account balance than you would with a direct plan.

But these programs aren't for everyone. ''They're designed for investors who buy and hold shares for at least three to five years,'' says Lauren Rudd, editor of The Direct Investor newsletter, which is published by the Society for Direct Investing, an educational association in Savannah, Ga.

FASTER ACTION. While you can't buy and sell these shares as quickly as you can with a broker, pricing has become more competitive. Unlike traditional DRIPs, which are ''batched'' with other orders and bought monthly or even quarterly, most no-load stock orders are now executed at least once a week.

Many direct stock-purchase plans, such as McDonald's and Ameritech, let investors redeem shares over the phone, says James Volpe, a vice-president at direct-stock-plan administrator First Chicago Trust.

Unearthing these no-load stock programs should soon get easier, too. In the next few weeks, the Securities & Exchange Commission is expected to allow companies to post no-load stock-plan prospectuses and enrollment forms on their Web sites. (Some issuers, such as Amoco and the Equitable Cos., already do so because their plans are registered with the SEC.) By yearend, investors may even be able to buy no-loads online using a debit or credit card, says Volpe. That could save investors a lot of time--and a bundle in brokerage commissions.

Barbara Hetzer



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