Is it possible to buy stock directly from a public company, bypassing a broker? It seems that discount brokers do nothing more than facilitate a trade and take a cut - I'd like to eliminate the middle man and buy from the company directly.
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3Robinhood?– josh3736Feb 25, 2016 at 17:50
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2Companies don't typically handle the ownership tracking and clearing of their own shares.– quidFeb 25, 2016 at 18:12
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6More fundamentally, companies don't usually own most of their shares - shareholders do. That's the whole point of stock: the company sold the shares in order to raise money, and now they don't own them anymore. So while the company might own some amount of its own stock, and might be willing to sell it through direct stock plans and the like, this can't be the solution for everyone: most of the stock is owned by shareholders, and if you want some, you have to buy it from them. Brokers and exchanges help you find these people and facilitate the trade.– Nate EldredgeFeb 25, 2016 at 18:14
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1Of course, a company can issue new shares of itself, but that's a separate issue - the company isn't going to issue brand new shares just because a single small investor wants to buy some.– Nate EldredgeFeb 25, 2016 at 18:16
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1@josh3736 Robinhood is a broker. The OP wants to bypass brokers.– FluxJun 26, 2021 at 6:50
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4 Answers
As far as I know, the answer to this is generally "no." The closest thing would be to identify the stock transfer company representing the company that you want to hold and buy through them. (I have held this way, but I don't know if it's available on all stocks.) This eliminates the broker, but there's still a "middle man" in the transfer company.
Note this section from the Stock transfer agent Wikipedia article:
A public company usually only designates one company to transfer its stock. Stock transfer agents also run annual meetings as inspector of elections, proxy voting, and special meetings of shareholders. They are considered the official keeper of the corporate shareholder records.
The decision to have a single transfer company is a practical one, ensuring that there is one entity responsible for recording this data - Hence even if you could buy stock "directly" from the company that you want to own, it would likely still get routed through the transfer company for recording.
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I see the other answers about DRIPs. For what it's worth, in my personal experience, these are either provided by brokers or by the transfer company.– user32479Feb 25, 2016 at 14:52
Yes, you often can buy stocks directly from the company at little or no transaction cost. Many companies have either a Dividend Reinvestment Plan (DRIP) or a Direct Stock Plan (DSP). With these plans, you purchase shares directly from the company (although, often there is a third party transfer agent that handles the transaction), and the stock is issued in your name. This differs from purchasing stock from a broker, where the stock normally remains in the name of the broker.
Generally, in order to begin participating in a DRIP, you need to already be a registered stockholder. This means that you need to purchase your first share of stock outside of the DRIP, and get it in your name. After that, you can register with the DRIP and purchase additional shares directly from the company. If the company has a DSP, you can begin purchasing shares directly without first being a stockholder.
With the advent of discount brokers, DRIPs do not save as much money for regular investors as they once did. However, they can still sometimes save money for someone who wants to purchase shares on a regular basis over even a discount broker.
If you are interested in DRIPs and DSPs and want to learn more, there is an informative website at dripinvesting.org that has lots of information on which DRIPs are available and how to get started.
answered Feb 25, 2016 at 16:40
This is allowed somewhat infrequently. You can often purchase stocks through DRIPs which might have little or no commission. For example Duke Energy (DUK) runs their plan internally, so you are buying from them directly. There is no setup fee, or reinvestment fee. There is a fee to sell.
Other companies might have someone else manage the DRIP but might subsidize some transaction costs giving you low cost to invest. Often DRIPs charge relatively large amounts to sell and they are not very nimble if trading is what you are after.
You can also go to work for a company, and often they allow you to buy stock from them at a discount (around 15% discount is common).
You can use a discount broker as well. TradeKing, which is not the lowest cost broker, allows buys and sells at 4.95 per trade. If trading 100 shares that is similar in cost to the DUK DRIP.
EDIT: Currently Fidelity and TD Ameritrade offer trades with zero commission to buy and sell stocks online. Provide you can fill out a web form, there is no cost to trade stocks and ETFs. TD Ameritrade allows you to call and get broker assisted trades, but the commission is high about $35/trade. However, that is easily avoidable.
If the company has a direct reinvestment plan or DRIP that they operate in house or contract out to a financial company to administer, yes.
There can still be transaction fees, and none of these I know of offer real time trading. Your trade price will typically be defined in the plan as the opening or closing price on the trade date. Sometimes these plans offer odd lot sales at a recent running average price which could provide a hundred dollar or so arbitrage opportunity.
answered Feb 25, 2016 at 14:30
