"Direct Investment Plans -- or DRIPs -- are a great way to invest regardless of the market environment; in fact, avoiding emotional decisions may be their greatest strength," observes DRIP expert Vita Nelson.

In her MoneyPaper's Direct Investing, she reviews the basics of DRIPs and discusses her new "Bargain Corner" pick -- Regions Financial (NYSE: RF).

"This strategy involve the four Ds -- dividend reinvestment, dollar-cost averaging, diversification, and discipline.

"Ibbotson Associates has reported that dividends accounted for about 40% of investor return since the mid-1920s.  Reinvesting those payouts adds the 'miracle of compounding' to those returns, and DRIPs allow every penny to do so becuase they even buy fractional shares.

"Dollar-cost averaging spreads investment dollars (and pricing risk) out over time, avoiding the usual tendency to buy at market tops (out of greed) and sell at market bottoms (out of fear).

"Given the long term uptrend in stocks, an investor's cost basis ends up being much lower than the value of the shares that they accumulate. This technique is especially easy with DRIPs, since most allow investments of as little as $25 or $50.

"Diversification can be accomplished just as easily, since such small amounts can be spready among many companies, reducing the risk of being too heavily committed to one or two equities.

"The final D -- discipline -- can be achieved either automatically (through monthly bank drafts) or through habit (seeing the shares accumulate with each quarterly reinvestment and optional cash purchases.

"Meanwhile, our latest featured stock, Regions Financial, is a bank holding company with about 1,900 offices in 16 Southern and Midwestern states. It has total assets of over $143 billion and a $93 million loan portfolio.

"The bank suffered from the same credit squeeze and real estate meltdown that was experienced by most of the large banks in the country. Region's experienced management team is now leading it back from these problems.

"At last tally, just over 5% of its loan portfolio was 90 days past due, which means that the other 95% have been keeping up with payments. 

"Consensus estimates call for Regions to lose about $0.95 a share this year and and $.061 in 2010; it's expected to return to profitability in the second half of next year. 

"Despite earnings losses, the shares have a book value of $12.35, more than twice its current market price.The recovery potential out to 2013-14 could be substantial, with the company earnings about $1 a share by then.

"The company also represents an attractive takeover candidate for a larger bank, but we don't recommend speculating on such an event.  Although the stock holds some risk in the wake of the housing collapse and credit crisis, the company remains a relatively strong entity in a geographic area that features about average population growth."