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.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 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.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.
That's my approach as well. I believe that I am better capable to allocate capital into any undervalued or underexposed positions in my portfolio than simply allowing the DRIP to reinvest all my dividends from that company on a specific date each quarter. The discount is nice, but in the accumulation phase of my portfolio construction I am much more focused on building strong positions than receiving a slight discount that I can easily overcome with a lower LO in the open market over a period of 2-3 days....It's a little bit of an oxymoron, I think....The way I do it is to pool all my dividend earnings together and plow them into 1 or 2 purchases.
That's perfectly fine. But drippers don't really about one particular purchase price, as most buy regularly over a long period of time. I buy small amounts of all my holdings over the course of the year for no fees other than a stamp. The shareprice doesn't concern me, it's the rising dividends. Sure, I know the typical argument that div are only 1/2 of returns, but compounding of the reinvestment is a long term process.That's my approach as well. I believe that I am better capable to allocate capital into any undervalued or underexposed positions in my portfolio than simply allowing the DRIP to reinvest all my dividends from that company on a specific date each quarter. The discount is nice, but in the accumulation phase of my portfolio construction I am much more focused on building strong positions than receiving a slight discount that I can easily overcome with a lower LO in the open market over a period of 2-3 days.
I just posted this in response to a Taxation thread on TFSA's but I figure some of the people who check out the DRIP threads may have more info on this, so any help or input would be appreciated.
I would like to buy Arc Energy Trust AET.UN and set up a DRIP. Does anyone know anything about doing this?
I use TD Waterhouse as my brokerage, and already DRIP ENB through a non registered account so I am familiar with the process.
If I buy 5K of AET.UN through a TD TFSA (which will clearly show a record of a 5K transaction), is it the same process to get the share registered (ie: buy a share certificate)?
And then the next question is, next year, when I go to buy another 5K, do I send the cheque to Computershare ? (aware that the SPP maximum monthly purchase is 3K for AET.UN, so I know this would have to be purchased over the course of 2 months)
I just want to get my fractional shares....
Investors who reinvest dividends without using DRIP generally piggyback on purchases from regular savings. In practice, my dividends are reinvested without incurring any additional transaction fees.I buy small amounts of all my holdings over the course of the year for no fees other than a stamp.
Both entry price and dividend growth determine the portfolio return. Anyhow, reinvesting dividends outside of DRIP doesn't sacrafice the dividend growth component.The shareprice doesn't concern me, it's the rising dividends. Sure, I know the typical argument that div are only 1/2 of returns, but compounding of the reinvestment is a long term process.
Again I already DRIP ENB in a non registered account. So I am familiar.Sorry to repeat, but you're confusing the TFSA with a Traditional DRIP. A Traditional DRIP is a non-registered/taxable holding, where you need to be a registered shareholder.
You're points are all true spidey, except that most if not all "traditional drippers" are not in the same boat.I also wonder with today's low commissions if DRIPing is worth it. It may have been when commissions were perhaps $45 per trade, but now at $9.99 there is less of an incentive for me to DRIP.
Some advantages I find to not DRIPing are:
- Keeps things simple for accounting purposes. I buy 100 shares and sell 100 shares. ACB is just the difference in price + commissions.
- I think getting the dividend in cash makes things a little more transparent. For example, on my Novartis shares, I noticed that the Swiss government hits Canadians with a big withholding tax. I may have been less likely to notice, if I had a DRIP program in place.
- As others pointed out, I can determine where to put my dividends. Perhaps my stock is overvalued at the moment - so why should I buy more? Depending on the market, I usually put my dividends either in cash or a low-MER index fund until I have enough and the time seems right to consider buying more stock (often a different stock).
- I can use the dividends to help rebalance my portfolio, rather than selling stock.