An investing process, not an analysis of Exxon-Mobil

Today’s article is a case study of a Lollapalooza: when many good concepts coalesce into single brilliant action. We’ll look at the rationale behind using ComputerShare to buy a stake in NYSE:XOM. Emerging from a challenging environment for oil prices, Exxon-Mobil is a good investment as of the publishing of this article—both authors at Duke of Dollars have purchased shares recently—but today’s topic is not the company itself but rather the mechanism of using ComputerShare for taxable investments. This platform sets itself apart from traditional stock brokers by acting as a liaison between you the investor and the company whose equity you are purchasing.

An overview of ComputerShare

ComputerShare is a transfer agent and investor services provider, not a stock broker. When you purchase shares through a traditional brokerage, you are making a deal for an existing share of a company held by an existing shareholder. The brokerage acts as a go-between for the buyer and seller and manages the paperwork to make the transfer official, taking a cut along the way.  The company that you are buying never sees a cent of the transaction, has no clue what your name is, and is oblivious that you own shares.

They only see that TDAmeritrade, ScottTrade, or Schwabb has increased its aggregate stake and that the total number of shares at the counterparty brokerage has likewise decreased. The broker is responsible for keeping track of which of its clients own how many slices of the pie.

When you purchase shares through ComputerShare, you are receiving a freshly minted, brand new share of your chosen company. The company receives your money as capital that it can invest in new projects, and the company knows you by name. You are the registered share holder. ComputerShare fulfills its duties as transfer agent, transferring ownership of the shares from the company to you the investor. It earns its money via payments from the company in which you invested. Exxon-Mobil would rather focus on drilling wells instead of maintaining its shareholder records and providing all the expected shareholder features at cost de minimus. Therefore, Exxon-Mobil pays ComputerShare to setup and run its direct investment program.

Why XOM via ComputerShare?

When buying equities via ComputerShare, the fee schedules and parameters of investment vary by company. Among the thousands of investments you can make via ComputerShare, XOM has arguably the best program. You can choose to make a one-time $250 minimum purchase or invest a minimum of $50 on a recurring basis. There are no fees for initial setup, DRIP, one-time purchases, or recurring investments. It costs absolutely nothing for a prospective investor to begin building a stake in XOM. Several other companies feature great DRIP programs, and you can easily search for purchase plans with no fees. The most active plans managed by ComputerShare are XOM, KO, JNJ, WMT, T, VZ, F, IBM, MCD, and INTC (we make no representation as to the quality of these investments; we are long all of them indirectly through index funds). Investing via ComputerShare is geared toward building wealth in the most universally recommended manner: slowly and automatically.

Time honored investing concepts

Taking advantage of the programs available through ComputerShare means that you will be participating in some of the most proven investing behaviors:

1 – Pay yourself first

A recurring investment is much like a bill to be paid. It’s deducted from your bank account on a schedule that you determine. We recommend that as soon as your paycheck is credited to your account, your recurring investment is debited. This way, you never see the money as “available” in your pockets, and you take heed of the maxim “Pay yourself first!”

2 – Passive investing

Passive investing often refers to using computer algorithms to determine equity weighting, i.e. index funds. However, the term also applies to this type of investment approach where you set it and forget it. Some research has shown that dead or “forgetful” investors outperform those of us who tinker with our portfolios. After setting up a recurring investment via ComputerShare, don’t touch it! Let it build and compound without suffering ill effects from your greasy market-timing fingers.

3 – No fees

One of the reasons that index funds are so highly recommended is that they’re cheap, usually a fraction of a percentage point of the balance per year. With ComputerShare direct investments, your fees can be absolutely ZERO dollars. It’s hard to find anything cheaper than free (though you could take advantage of brokerage opening-deposit bonuses to essentially be paid a small reward for investing, but that’s a topic for another day). Keeping fees low or non-existent is a critical component of long term investing, and ComputerShare certainly checks that box.

4 – Low minimums

A drawback of Vanguard’s famous funds is that they often carry a $3,000 minimum. It’s hard, sometimes, to gather up that much dough to make an investment. With ComputerShare, you don’t even need to pool up the money; just setup the recurring $50 debit, and voila – you’re an investor.

5 – Geared toward DRIP

Reinvesting dividends is like putting a turbocharger on your equity, and this platform encourages DRIP’ing. The service is almost always free for the investor. Combining regular contributions with DRIP programs is a great way to build a substantial equity stake quickly.

6 – Dollar cost averaging

Whether the funds come from new contributions or from reinvested dividends, investing via ComputerShare sets you up for easy dollar cost averaging. One of the best ways to obtain a fair weighted average price for equities in the long run is to invest on a time schedule instead of some harebrained market timing intuition. You’ll be purchasing shares every month regardless of Mr. Market’s mood swings. You’ll buy the highs, the lows, and in between, and ultimately you’ll end up with a fair price.

Drawbacks and conclusion

Where ComputerShare falls short is tax-advantaged accounts. Investing in the cozy confines of an IRA via ComputerShare isn’t worthwhile; use a traditional brokerage house for those accounts. But for Dukes that are step XII (“Building your taxable brokerage accounts”), ComputerShare offers a compelling platform for you to harness psychological and financial best practices around making investments.


We have no interest or incentive, paid or unpaid, in recommending ComputerShare. We are long XOM both directly and indirectly through mutual funds and/or index funds. We simply find the tool useful and the stock as a good example to help our readers on their journeys to wealth. Best of luck on your road to your own personal kingdom!