re: another little update on USD DRIP dividends in td rrsp
the broker says that the new patch, expected to be in place by 31 december/13, will wash USD DRIP dividends in registered accounts at a mid rate between the buy & sell rates in the spread. Details of each dividend transaction are to appear on statements, the broker says.
such a rate would be identical to, or only a few basis points away from, the spot rate, which in turn forms bank of canada noon rates at midday.
imho it's not possible to get a better exchange rate deal than this.
however, the big green confirms that it will not be exchanging regular USD dividends in registered accounts via this new patch mechanism.
in other words, USD non-drip dividends in tddi registered accounts will still be subject to standard broker FX fees. At tddi, these seem to hover in a 1.25-1.45% range.
one can see where all this is going to lead. TD registered account clients are going to stampede their US holdings into DRIP dividends. Where DRIPs are not presently offered, TD clients are going to ask that they be set up!
may i suggest that TD clients look carefully at all dividend stocks or etfs in all TD registered accounts. Look particularly for the 20 canadian companies that - unknown to most investors - are paying their dividends strictly in US dollars.
later on today, if i have time, i'll republish the list of these companies. Big, important, widely-held public canadian companies are on that list. The likes of potash, agrium, encana, talisman, goldcorp, barrick, magna, thomson reuters, open text are on that list. All of these companies issue dividends in USD only.
these dividends are creating a host of unnecessary foreign exchange fees, because the majority of canadian investors do not yet understand that most brokers are, indeed, charging concealed or partially-concealed FX fees. The problem is found across the board, from registered to cash to margin accounts.
the broker says that the new patch, expected to be in place by 31 december/13, will wash USD DRIP dividends in registered accounts at a mid rate between the buy & sell rates in the spread. Details of each dividend transaction are to appear on statements, the broker says.
such a rate would be identical to, or only a few basis points away from, the spot rate, which in turn forms bank of canada noon rates at midday.
imho it's not possible to get a better exchange rate deal than this.
however, the big green confirms that it will not be exchanging regular USD dividends in registered accounts via this new patch mechanism.
in other words, USD non-drip dividends in tddi registered accounts will still be subject to standard broker FX fees. At tddi, these seem to hover in a 1.25-1.45% range.
one can see where all this is going to lead. TD registered account clients are going to stampede their US holdings into DRIP dividends. Where DRIPs are not presently offered, TD clients are going to ask that they be set up!
may i suggest that TD clients look carefully at all dividend stocks or etfs in all TD registered accounts. Look particularly for the 20 canadian companies that - unknown to most investors - are paying their dividends strictly in US dollars.
later on today, if i have time, i'll republish the list of these companies. Big, important, widely-held public canadian companies are on that list. The likes of potash, agrium, encana, talisman, goldcorp, barrick, magna, thomson reuters, open text are on that list. All of these companies issue dividends in USD only.
these dividends are creating a host of unnecessary foreign exchange fees, because the majority of canadian investors do not yet understand that most brokers are, indeed, charging concealed or partially-concealed FX fees. The problem is found across the board, from registered to cash to margin accounts.
