Mutual Funds with Low Initial Investment

So I have run into an interesting problem. I have stocks that I hold primarily for their dividend - for example - VZ. Now, every quarter I get a nice enough dividend that gets paid as cash. So pretty soon, I have accumulated some cash in the account. The problem is - the cash is lying idle.

Ideally, I would want the dividends to just be reinvested in the stock. However, I have not found a way to automate that in case of stocks (like you could in a mutual fund, take distributions in the form of reinvestment). So you would need to actually make a trade to put this cash back in original stock - but that would cost money - and especially since the dividend cash is a small amount, the commission as percentage of this amount could be pretty high.

So I need a place to park this cash without incurring any transaction costs. Once this accumulates to a large enough number, then we can make a trade and add to the stock - but until then we want the cash to just quietly work for us. The best option I could think of was to put it in a No- Load, No-Transaction-Cost, Index Mutual Fund. Sound good - but then I run into the problem that most of these funds have a very high initial investment requirement - often several thousand dollars - and I am not making that much just on dividends on one stock.

I spent a good chunk of time looking for a mutual fund that fits the criteria above but has very low initial investment requirements. I found one for VZ, LEGG MASON BATTERYMARCH S&P 500 (SBSPX). It has a pretty low initial requirement of just $100 - well within the reach of dividend payouts. I am now using this fund to hold my spare dividend cash from VZ. This fund, though great for my need, does have a little high expense ratio for a index mutual fund - but I guess that is the price to pay for the low initial investment requirement.

The problem is not fully solved though since the other accounts where I need a similar mutual fund does not support the Legg Mason family of mutual funds. So the search is on for another mutual fund that is No-Load, No-Transaction-Cost, Index mutual fund that has low low initial investment requirement.

UPDATE: See this post for my solution to the problem.