DRIPs (Dividend Reinvestment Plans) - news and updates

MoneyEnergy · 04-04-2009, 09:47 PM

Just wanted a place to keep up to date on DRIP news, cancellations, changes, etc. What's your favorite DRIP?

Any news on DRIP plans in Canada?

moneygardener · 04-04-2009, 10:11 PM

Latest change to one of my DRIPs was Royal Bank's 3% discount.

http://www.rbc.com/newsroom/2009/0226-plan.html

I currently DRIP:
Johnson & Johnson
Telus
Royal Bank
Manulife

Max · 04-05-2009, 07:59 AM

In the fine print, I found out it not so easy to invest in DRIPs through my brokerage. I am with CIBC Investors Edge, and in order to qualify for the 3% discount on reinvested dividends, I would have to register my shares (at a hefty fee). I found out that CIBC's automatic enrollment plan really just takes the cash you receive from the dividend and reinvests it at the market rate.

I am a little nervous about the loss of control on the market price of my contributions if I just send them a cheque to buy shares directly. I do not really want to make regular contributions to the DRIP, I would rather just contribute a lump sum and forget about it.

What is the best strategy to make an initial investment in the DRIP?

bgc_fan · 04-05-2009, 10:32 AM

Quote:

Originally Posted by Max

In the fine print, I found out it not so easy to invest in DRIPs through my brokerage. I am with CIBC Investors Edge, and in order to qualify for the 3% discount on reinvested dividends, I would have to register my shares (at a hefty fee). I found out that CIBC's automatic enrollment plan really just takes the cash you receive from the dividend and reinvests it at the market rate.

I am a little nervous about the loss of control on the market price of my contributions if I just send them a cheque to buy shares directly. I do not really want to make regular contributions to the DRIP, I would rather just contribute a lump sum and forget about it.

I was pretty much in the same situation. Personally, I find that a one-time cost to register the stock ($31.80, last time I did it with CIBC) isn't that onerous. I picked up a number of stocks, so I have a small portfolio of them, but haven't made any extra purchases lately (mortgage taking its toll). At any case, I let the dividends take care of themselves and I don't really bother with them. Even if I don't have the extra money to purchase more, at least the dividends are taking advantage of the current stock prices. My thoughts on the matter are that if I have the extra money, I'll send a cheque and purchase more of an undervalued stock.

As for DRIP news, BMO now offers a 2% discount on reinvested shares, not on cash purchases:
https://www-us.computershare.com/inv...estorcontact=y

MoneyEnergy · 04-05-2009, 11:00 AM

If you make a large enough initial lump sum purchase of your future DRIP stock, then the time it will take to fully make back that outlay will be much less. Eg:

$52.00 certificate fee
$29.00 commission fee (using Waterhouse prices, here)
=$81.00

If you're able to buy $2000 of Scotiabank up front, that gets you about $28 with each dividend payment (assuming about a $35 share price, not sure what it's at right now). So in less than a year, you'll have your initial outlay back - and probably sooner, once they start bringing in dividend increases again. Obviously this can happen sooner the more you're able to purchase up front. With stocks that have discounts, it happens even sooner. Enbridge is great for that.

MoneyEnergy · 04-05-2009, 11:04 AM

I currently DRIP:

Scotiabank
BMO
Telus
Enbridge
TransCanada
Imperial Oil
Suncor
BCE
TransAlta
Bell Aliant
CIBC...

I have about 20 or so. This is in addition to stocks I have at the broker.

Cal · 06-17-2009, 04:58 PM

Yep. Same fees as MoneyEnergy, I used TdWaterhouse to make initial purchase.

After that, if the company has a SPP then only takes a few payments to save on the stock repurchase fees that you would have paid to the bank anyways.

Has anyone bought MFC since they changed their DRIP structure? I haven't yet, but m considering now that it has much lower DRIP fees.

Hoping for this market to ease up a bit to buy at a better price....

Jon202 · 06-19-2009, 09:21 PM

Quote:

Originally Posted by rookie888

Has anyone bought MFC since they changed their DRIP structure? I haven't yet, but m considering now that it has much lower DRIP fees.

I just picked up my starter in from a group buy and sent in the paper work at the start of the week. I think I just missed the div record date.

Dave · 06-19-2009, 09:50 PM

I have ENB, TRP, SU, CGI, BMO, BNS & CM. I picked up my first shares from others who already had drips and who transferred them to me. The entire process takes a lot of patience. There is a wealth of information on drip forums if you are interested. I especially like the fact that you can get started with small sums and the dividends are re-invested automatically unless otherwise specified.

Dave

FinancialJungle · 06-20-2009, 12:32 AM

Been dividend investing for several years now, but still very reluctant to DRIP. It's a little bit of an oxymoron, I think. Presumably we stock pick to buy excellent businesses at excellent discounts. 3% off market price usually doesn't spell enough of a discount, and the 3% discount is only available at the expense of dilluting existing shares. Plus the amount of effort required to track ACB just isn't compensated by the discount on the marginal purchases. The way I do it is to pool all my dividend earnings together and plow them into 1 or 2 purchases.

Not to dismiss all companies that offer DRIP, but the concept of DRIP, in some isolated cases, is a PONZI scheme; selling shares to fund dividends to existing shareholders. I much rather see my businesses raise capital only when capital is cheap, when share prices are over-inflated.

04-04-2009, 09:47 PM	#1
MoneyEnergy Member Join Date: Apr 2009 Posts: 35	DRIPs (Dividend Reinvestment Plans) - news and updates Just wanted a place to keep up to date on DRIP news, cancellations, changes, etc. What's your favorite DRIP? Any news on DRIP plans in Canada? __________________ MoneyEnergy - Canadian blog on DRIPs and cashflow On Twitter

04-04-2009, 10:11 PM	#2
moneygardener Member Join Date: Apr 2009 Location: Brantford, Ontario, Canada Posts: 73	Latest change to one of my DRIPs was Royal Bank's 3% discount. http://www.rbc.com/newsroom/2009/0226-plan.html I currently DRIP: Johnson & Johnson Telus Royal Bank Manulife __________________ the moneygardener -shovel ready

04-05-2009, 11:00 AM	#5
MoneyEnergy Member Join Date: Apr 2009 Posts: 35	If you make a large enough initial lump sum purchase of your future DRIP stock, then the time it will take to fully make back that outlay will be much less. Eg: $52.00 certificate fee $29.00 commission fee (using Waterhouse prices, here) =$81.00 If you're able to buy $2000 of Scotiabank up front, that gets you about $28 with each dividend payment (assuming about a $35 share price, not sure what it's at right now). So in less than a year, you'll have your initial outlay back - and probably sooner, once they start bringing in dividend increases again. Obviously this can happen sooner the more you're able to purchase up front. With stocks that have discounts, it happens even sooner. Enbridge is great for that. __________________ MoneyEnergy - Canadian blog on DRIPs and cashflow On Twitter

04-05-2009, 11:04 AM	#6
MoneyEnergy Member Join Date: Apr 2009 Posts: 35	I currently DRIP: Scotiabank BMO Telus Enbridge TransCanada Imperial Oil Suncor BCE TransAlta Bell Aliant CIBC... I have about 20 or so. This is in addition to stocks I have at the broker. __________________ MoneyEnergy - Canadian blog on DRIPs and cashflow On Twitter

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04-05-2009, 07:59 AM	#3
Max Member Join Date: Apr 2009 Posts: 43	In the fine print, I found out it not so easy to invest in DRIPs through my brokerage. I am with CIBC Investors Edge, and in order to qualify for the 3% discount on reinvested dividends, I would have to register my shares (at a hefty fee). I found out that CIBC's automatic enrollment plan really just takes the cash you receive from the dividend and reinvests it at the market rate. I am a little nervous about the loss of control on the market price of my contributions if I just send them a cheque to buy shares directly. I do not really want to make regular contributions to the DRIP, I would rather just contribute a lump sum and forget about it. What is the best strategy to make an initial investment in the DRIP?

06-17-2009, 04:58 PM	#7
Cal Senior Member Join Date: Jun 2009 Posts: 471	Yep. Same fees as MoneyEnergy, I used TdWaterhouse to make initial purchase. After that, if the company has a SPP then only takes a few payments to save on the stock repurchase fees that you would have paid to the bank anyways. Has anyone bought MFC since they changed their DRIP structure? I haven't yet, but m considering now that it has much lower DRIP fees. Hoping for this market to ease up a bit to buy at a better price....

06-19-2009, 09:50 PM	#9
Dave Junior Member Join Date: Apr 2009 Posts: 17	I have ENB, TRP, SU, CGI, BMO, BNS & CM. I picked up my first shares from others who already had drips and who transferred them to me. The entire process takes a lot of patience. There is a wealth of information on drip forums if you are interested. I especially like the fact that you can get started with small sums and the dividends are re-invested automatically unless otherwise specified. Dave

06-20-2009, 12:32 AM	#10
FinancialJungle Member Join Date: Apr 2009 Location: Vancouver Posts: 89	Been dividend investing for several years now, but still very reluctant to DRIP. It's a little bit of an oxymoron, I think. Presumably we stock pick to buy excellent businesses at excellent discounts. 3% off market price usually doesn't spell enough of a discount, and the 3% discount is only available at the expense of dilluting existing shares. Plus the amount of effort required to track ACB just isn't compensated by the discount on the marginal purchases. The way I do it is to pool all my dividend earnings together and plow them into 1 or 2 purchases. Not to dismiss all companies that offer DRIP, but the concept of DRIP, in some isolated cases, is a PONZI scheme; selling shares to fund dividends to existing shareholders. I much rather see my businesses raise capital only when capital is cheap, when share prices are over-inflated.