# Want to start my DRIP/SPP-



## indexxx (Oct 31, 2011)

I want to begin implementing a dividend investing strategy- I'm looking at the fee structure for various brokers on this page:

http://sites.google.com/site/cdndrips/canadiandiscountbrokers


For the purpose of this question, say I wanted to buy Enbridge:

I recently set up Questrade accounts and would like to hold my shares in my TFSA- but it looks to me that I'm better off staying with RBC (my regular bank) to do this; while I can by a share for 4.95, Questrade wants $300.00 for the certificate!! RBC asks 29.95 for a trade, but the certificate is only $50.00. So if I open a TFSA at RBC, then buy my initial Enbridge share, request the certificate, and enrol in Enbridge's DRIP, I can then do an SPP and not pay RBC it's 29.95 per transaction. So I'll pay $79.95 total upfront and never pay fees again for buying shares in the company of my choosing... is this correct?


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## Toronto.gal (Jan 8, 2010)

You can only have synthetic drips with TFSA accounts as Transfer Agents, such as Canadian Stock Transfer [CST], which handle Enbridge [previously CIBC Mellon] don't administer TFSA shares.

$300 for a certificate is highway robbery; I paid $50.


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## Cal (Jun 17, 2009)

$300 is a rip off for a share cert. TDW charges $50.

At www.dripinvesting.org, you can probably get one for $10 via a trade w another person on the forum.

And yes, you have that understood correctly.


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## KaeJS (Sep 28, 2010)

Why do people want stock certificates?

Am I missing something?


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## dotnet_nerd (Jul 1, 2009)

KaeJS said:


> Why do people want stock certificates?
> 
> Am I missing something?


To participate in a DRIP you need to be a shareholder of the company. Hence the need for a share certificate in your name.

Owning the stock in a trading account doesn't count, those shares are held for you by the brokerage in trust in the name of "Street".


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## Toronto.gal (Jan 8, 2010)

KaeJS said:


> Why do people want stock certificates?


What DN said.

Also, they are pretty nice looking KaeJS; I'm actually thinking of framing & decorating my study room with them.  

When some of my stocks split, like ENB for example, I received a 2nd certificate from the Transfer Agent [free], so would you like one for X-mas? 

Look for yourself and tell me how could your brokerage charge $300 for them.  

http://www.google.ca/search?tbm=isc...560l0l4855l18l17l0l1l1l0l222l2264l3.11.2l16l0

I'm aware that you know this already, but I'll repeat for the benefit of others.

*1. Synthetic DRIP* - no certificate:

- you deal with your brokerage;

- does not allow purchase of fractional shares, so if your BMO dividend were $100, at today's price [$56.66], it could only buy you 1 share with remaining balance of $43.34 going into your brokerage account. If your dividend were $55, it would buy you 0 shares; 

- commission would apply for additional share purchases.

*2. Real DRIP* - certificate required:

- you deal directly with the companies in question via the Transfer Agents;

- allows the purchase of fractional shares, so your entire $100 BMO dividend in above scenario would be reinvested [1.7649 shares], a key important difference as this can add big over time [in your case, 40+ years];

- free SPP, another key difference; you pay no commissions, you simply send a cheque to the Transfer Agent for the additional stock purchase. Most have a minimum requirement, ie: $100 at any time, meaning that it is not a monthly requirement, but the disadvantage is that you don't have control over the price as stocks are bought on a set-date every month [or quarterly for some companies]. If a stock were to drop drastically however, you could always take advantage by trading/buying it with your brokerage & sending the profits to the TA.

So undoubtedly, #2 method accelerates ownership of shares as full dividends are reinvested and you save money in commission fees as well, which over a long period of time, it can add up to thousands! 

But, it's not for everyone as it does require a bit of book-keeping time & effort!


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## Sampson (Apr 3, 2009)

Toronto.gal said:


> - allows the purchase of fractional shares, so your entire $100 BMO dividend in above scenario would be reinvested [1.7649 shares], a key important difference as this can add big over time [in your case, 40+ years];


This assumes that the cash from not being able to buy a whole share is not invested somewhere else. It doesn't matter if my $43.34 isn't used to buy more BMO, as long as it is invested elsewhere.


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## Oldroe (Sep 18, 2009)

The bit of bookkeeping is a pain. Selling is a nightmare.


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## Toronto.gal (Jan 8, 2010)

Sampson said:


> This assumes that the cash from not being able to buy a whole share is not invested somewhere else. It doesn't matter if my $43.34 isn't used to buy more BMO, as long as it is invested elsewhere.


True enough if you collected enough dividends to make a worthwhile purchase elsewhere, if not, most would not pay a commission fee for just a few shares. Also, not only would commission be payable, but no discount would apply to additional shares purchased with the remaining cash.


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## Toronto.gal (Jan 8, 2010)

Oldroe said:


> The bit of bookkeeping is a pain. Selling is a nightmare.


Yes, it is work, but if you only drip a few, say 5 for example that pay quarterly dividends, then that would require just 5 updates per q, how long would that take? 

I have never sold from my true drips, but I think the nightmare applies only if you're selling a few; if you were to sell all, it would be clean, right?


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> Yes, it is work, but if you only drip a few, say 5 for example that pay quarterly dividends, then that would require just 25 updates per q, how long would that take?
> 
> I have never sold from my true drips, but I think the nightmare applies only if you're selling a few; if you were to sell all, it would be clean, right?


Why would it be 25 updates/quarter? Shouldn't it just be 5 updates per quarter? (ie one for each stock?).

If you sell any security in a non-registered account, you have to know the current ACB in order calculate the capital gain (or loss). It doesn't matter if you do a partial sell or sell them all.

Selling doesn't change the ACB.


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## Toronto.gal (Jan 8, 2010)

I meant 5; I'm typing from a new lap-top that I'm still getting used to, hence many typos. 

I know about the ACB; but if updates are done regularly, I don't understand the nightmare scenario.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> I meant 5; I'm typing from a new lap-top that I'm still getting used to, hence many typos.
> 
> I know about the ACB; but if updates are done regularly, I don't understand the nightmare scenario.


Ahhh..

It's the regular updates that are the nightmare scenario.


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## Toronto.gal (Jan 8, 2010)

Got it!

Thanks FP for clearing the confusion caused by Oldroe.


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## Cal (Jun 17, 2009)

Personally I enjoy tracking all of the updates, drip purchases and such.

No inconvenience for me at all.


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## Jon202 (Apr 14, 2009)

Everything that has been written so far has been accurate except for the point about you MUST have certificates to participate in in company-sponsored DRIP/SPP plans. That's partially true and changing.

1.) Tim Hortons was the 1st Canadian company to setup a Canada-wide direct plan (with fees, albeit) so avoid having to buy on the open market or exchange privately. http://www.dripprimer.ca/timhortons

2.) Computershare is getting more and more companies on their DRS (direct reg. system) which avoids certificates all together. 

3.) When some of the trusts converted to Corps, they also went with small house transfer agents which don't do certificates. 

Jon


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## KaeJS (Sep 28, 2010)

Toronto.gal said:


> Also, they are pretty nice looking KaeJS; I'm actually thinking of framing & decorating my study room with them.
> 
> When some of my stocks split, like ENB for example, I received a 2nd certificate from the Transfer Agent [free], so would you like one for X-mas?






Toronto.gal said:


> *1. Synthetic DRIP* - no certificate:
> 
> - commission would apply for additional share purchases.


I thought all dripping (synth and regular) were commission-free? I thought that's what the advantage to dripping was (besides compounding).

Does this mean if I were to implement a synthetic drip on my 100 BCE shares, I would pay $4.95 per quarter (with questrade) to drip 1 share and have the rest of the funds deposited to my cash account?

That doesn't sound right... 

Unless I misunderstood what you have said? 

Also, lets say I own 100 shares in BCE and want to DRIP this regularly (with the certificate). Does the certificate I have need to say 100 shares, or can I own a certificate that says 50 shares and still be able to take advantage of a DRIP based on 100 shares?


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## Jon202 (Apr 14, 2009)

KaeJS said:


> I thought all dripping (synth and regular) were commission-free? I thought that's what the advantage to dripping was (besides compounding).


You skipped over the part "additional". Yes, synth. DRIPs with brokers are generally free (whole share only) but find me a broker who'll let you buy more with 'new' money for free. Doesn't exist. Of course there's the ETFs that have free PACC plans and the free ETFs with iTrade but that's not quite the same.

All Canadian SPP plans (except for Tim Hortons) allow you to buy more shares for free, down to the fraction of a share.


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## Toronto.gal (Jan 8, 2010)

Jon202 said:


> That's partially true and changing.


Sure, nothing stays the same forever, however, things are not changing fast enough for my liking Jon, as the additional companies I wish to add to my list still require a certificate. 

I'm surprised THI continues to charge fees; MFC thought of doing the same, but reconsidered [and no wonder]. 

*KaeJS* - just to reinforce what Jon said: 

- yes, the dripping is free for either method, but only with your dividend payments; 

- Stock Purchase Plan/Optional Cash Purchase [SPP/OCP] is not available commission free with your brokerage; if you wanted to buy additional shares, you would have to pay a commission, but not the case with Transfer Agents; 

- the certificate will reflect the # of shares that were transferred to the Transfer Agent. 

Take a look at the website for more information on investor services:
http://corporate.computershare.com/Canada/OurBusiness/cis/Pages/InvestorServices.aspx


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## Toronto.gal (Jan 8, 2010)

KaeJS said:


> 1. lets say I own 100 shares in BCE and want to DRIP this regularly (with the certificate).
> 2. Does the certificate I have need to say 100 shares
> 3. can I own a certificate that says 50 shares and still be able to take advantage of a DRIP based on 100 shares?


Let me try this again separately to clear your confusion.

1. Then that means that the TA now holds your 100 shares.
2. Yes. 
3. Eh? How could you drip 100 shares if the TA only had 50?


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## Cal (Jun 17, 2009)

KaeJS - I am sure that some of the sites mentioned above will help clarify everthing further if need be.


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## Toronto.gal (Jan 8, 2010)

*KaeJS:* 

Answer this riddle: if you had 50 BMO shares with your brokerage, could you ask them to pay you dividends for 100 shares?


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## KaeJS (Sep 28, 2010)

Thanks for all the information everyone.

So, as far as I see it, the easiest way to get started is to have someone transfer 1 share to me under my name through a transfer agent, in which case a new stock certificate would be issued under my name, allowing my to start dripping and participating in OCP?

This means I wouldn't actually need to buy a $300 certificate from Questrade?


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## KaeJS (Sep 28, 2010)

Toronto.gal said:


> *KaeJS:*
> 
> Answer this riddle: if you had 50 BMO shares with your brokerage, could you ask them to pay you dividends for 100 shares?


No. 

... unfortunately.


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## indexxx (Oct 31, 2011)

*ENB certificate*

@ T.O. girl- Sure, i'd love one for Xmas! $10.00 in transfer fee sound good ?


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## Toronto.gal (Jan 8, 2010)

Ahh.... too late, it's been sold!


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