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Discussion Starter #1 (Edited)
In an unregistered account, if I don't need the income,

is it better , wiser , more tax efficient to

DRIP stock shares or take the dividend in CASH ?
 

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In an unregistered account, if I don't need the income,

is it better , wiser , more tax efficient to

DRIP stock shares or take the dividend in CASH ?
Tax-wise, I don't think there is a difference. You will get a tax slip for the dividends regardless of DRIP or cash out. You just need to track the ACB for the future if/when you want to sell.

Personally, I like DRIPs, particularly when the market is low so I am automatically getting bargain stocks.
 

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In an unregistered account, if I don't need the income,

is it better , wiser , more tax efficient to

DRIP stock shares or take the dividend in CASH ?
No question take the cash.

Dripping in an unregistered account is a pain.

You have to keep track of the cost base that changes every month.

You are responsible to CRA for an accurate cost base that you can prove and no one else (including the brokers who are notoriously inaccurate).

ltr
 

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I have a mixture of Drip and Cash into the same account with TDDI (WebBroker). Having said that, I had to call TDDI to get it setup (I wish I could do it online...!)
 

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I DRIP in my taxable account. Set it and forget it. It's not a ton of work to track ACB. Though you should take cash if you want to adjust your asset allocation.
 

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How do you track acb? Does the broker calculate your acb for you or do you have to do it yourself?
 

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How do you track acb? Does the broker calculate your acb for you or do you have to do it yourself?
I do, just use a spreadsheet and at the end of the year, I just update it with the distributions that I've accumulated in the year.

The broker does as well, but it is worth doublechecking for yourself.
 

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Brokerages do a pretty good job of your cost base in most instances, but not all of them. One area they fail miserably on in is when one transfers between USD and CAD accounts. Best to maintain your own Cost Base via spreadsheet or something like Adjusted Cost Base.ca - The Free and Easy Way to Calculate ACB and and Track Capital Gains Ultimately, you are solely responsible for your cost base. Don't make the excuse the brokerage does it for you.
 

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I would always take cash. Immediately reinvesting dividends looks awful now that markets have crashed. The optionality of cash is powerful.
 

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... Dripping in an unregistered account is a pain.
You have to keep track of the cost base that changes every month.
Good that your identifying a potential issue but it is far more of a YMMV situation.

For about two decades, I've DRIP'd where in my case, instead of every month - it's been four months of the year.

It seems more tedious than paiinful. The particular month (it is on a schedule) brokerage report has to have the number of shares plus the price taken from the detail lines then plugged into my ACB spreadsheet.

I'm checking the monthly reports for anomalies anyway and the ACB spreadsheet already handles no commission buys so the time/effort seems minimal to me.

Something like an ETF has has RoC to reduce the ACB then the DRIP to increase it would double the transactions. Again, one has to be prepared for these anyway so I'm not sure it would be all that big a deal.


Basically, more DRIPs = more reports to check and more transactions. I leave it for the individual to decide how many becomes too many for them.


... You are responsible to CRA for an accurate cost base that you can prove and no one else (including the brokers who are notoriously inaccurate).
True ... though I guess I've been lucky to avoid transactions that cause them. My broker's errors have been few and far between.


Cheers
 

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In an unregistered account, if I don't need the income,

is it better , wiser , more tax efficient to
DRIP stock shares or take the dividend in CASH ?
IMO ... it depends on you as an individual investor.

If you have trouble making up your mind to re-invest cash plus the like the company business prospects (you are buying more stock automatically) - it may be useful for you. It may also be slightly cheaper as there is no buy commission and possibly a discount.

You'll also have to be sure of how much effort the additional automatic buy transactions will add to your ACB tracking. Even if your broker does the ACB correctly, I'd still recommend at least verifying every now and again. Mistakes happen when they happen with no guarantee that the investor or the broker is accurate.


If you have no trouble re-investing cash where you want control over what prices are paid - it may not be a good idea.


You do want to be careful that the company is a good one. Having lots of extra Nortel stock from DRIPs was just as bad as having the original amount of Nortel stock on the day they went bankcrupt!!


Cheers
 

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I have been DRIP'ing for many years, I like the auto buying and close to 15 years or so later it is amazing how those drip'ed stocks add up. And with div growth, the income has been steadily increasing. If I ever need to stop the drip and take the cash, it is like having a very reliable second pension.
I have been using adjustedcostbase.ca, and I have found that over this amount of time, TDDI is literally either exactly the same or within a penny or two. I have 26 stocks in my unreg account, so it is a little tedious to update the adjusted cost base sight, but I do it in case CRA comes a knockin......if I ever sell. The real downfall is the gross up that must be done for the CRA. It knocks the crap out of ever getting OAS!
 

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I would always take cash. Immediately reinvesting dividends looks awful now that markets have crashed. The optionality of cash is powerful.
Unless you need the cash to buy groceries, now might be a great time to DRIP. Prices are low. You can grab more units. If you need the cash for food, take the cash.
 

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How do you track acb? Does the broker calculate your acb for you or do you have to do it yourself?
I use a spreadsheet. It's not that hard. Maybe a bit of a learning curve, but then I just plug in the numbers once a month or so, and it only takes a few minutes.
 

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There are a couple of things to keep in mind if you are buying in a DRIP program:
  1. If you decide to sell all or your holdings in a stock that is being DRIPped, don't do it between the dividend record date and pay date. If you do, you will get that last DRIP, resulting in a small number of share that you probably don't want and might have to pay a trade commission to sell.
  2. If you have a loss position and decide to tax-loss harvest be careful not to sell 30 days before or after a DRIP transaction. If you do, the superficial loss rule will apply and you won't be able to claim the capital loss for tax purposes. This will apply even if your DRIP transaction takes place in a different account.
 
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