The Ultimate DRIP-folio

Do any of these stocks offer a discount if you DRIP them? The stocks I like (and own) are:
BNS, CWT.UN, COS.UN, ENB, FTS, MFC, REI.UN, TD, TRP.

I know that TD just announced a discount (I believe 2%) but this is partly why I wanted to do this exercise. If we could all pool resources together we might find out about some nice discounts on companies we already own and get a discount of up to 3% or more for some stocks we hold.

Another high yielding stock that is popular for its drip is ax.un

FrugalTrader said:

Do any of these stocks offer a discount if you DRIP them? The stocks I like (and own) are:
BNS, CWT.UN, COS.UN, ENB, FTS, MFC, REI.UN, TD, TRP.

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RioCan offers a discount. I also believe that YLO.UN discounts DRIP'pers'

I think Royal and BMO offer a DRIP discount.

Here is a link for some of the DRIP discounts:

http://cdndrips.blogspot.com/

Also...Brad911...are your DRIPs set up in a registered account or non? As some of the selections may be better suited for registered, than non.

I'm not suggesting or recommending it, but I do know CSH.UN offers a 3% drip discount, although I think it's a 1000 share minimum before they'll do the drip.

It will be interesting to compare your picks against cbz.to or xdv.to.

Here are my picks: BCE, FTS, IPL.UN, TD, TRP

Are we distinguishing real/full/traditional DRIPs from synthetic DRIPs offered through the banks?

I go with the "full" DRIPs and don't like any that have high minimum OCP amounts (high for me right now is $500). My current faves are probably:

T
TA
TRP (discount)
ENB (discount)
BA.UN
REI.UN
BNS

If a company offers a DRIP (such as Riocan), and you can purchase shares directly from the company (commission free). is there a way you can hold it in a TFSA to avoid the taxes on the dividend distribution?

Chigu said:

If a company offers a DRIP (such as Riocan), and you can purchase shares directly from the company (commission free).

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yes.

Chigu said:

is there a way you can hold it in a TFSA to avoid the taxes on the dividend distribution?

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yes, but not at the same time as above.

Jon202 said:

yes, but not at the same time as above.

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How so?

michika said:

How so?

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http://cdndrips.googlepages.com/canadiandripfaq

Questions #4, #6, #10.

Thanks for the info. I did the reading, so now I have a question. I am looking to exclusively invest my DRIPs in trusts (oil, gas, real estate etc), as they seem to provide about 8-10% dividend based on current dividends paid and the current market price/unit.

Now my question is if I should hold the DRIP inside a TFSA (synthetic DRIP) vs purchasing from the company (trustee) themselves. Now the mix of companies I want to invest in has some that provide a discount in their DRIP (3% - 5%), and some don't offer a discount.

Would it be beneficial for me to place all the units that don't offer a discount in the TFSA, and for the ones that do offer a discount I should do it outside a registered investment?

My gut feeling is use the TFSA, b/c the loss of the discount and the fractional units may not offset the tax implications of keeping it outside the TFSA.

Any suggestions would be helpful.

All depends are your particular situation, goals, timeline and available capital. You'll have to weigh the pros and cons with that in mind.

Chigu - I use tdwaterhouse for my tfsa, and they will honor the discounts on the company drips....but no fractional units.

I think Chigu's criteria for buy stocks (highest distribution) is absolutely nuts, but he did now ask re that.

There are tax implications to the holding acccount. Most distributions from income trusts are fully taxable like interest income, because they are an allocation of the pre-tax operating results of the business.

Holding the securities outside RRSP/RESP/RRIF/TFSA means the distributions are fully taxed. As a general rule mutual funds are best held inside tax-sheltered accounts.

There are some O&G trusts that used to have piles of pre-paid tax credits so that their distributions were returns-of-capital (no tax - reduces ACB). I would think those companies are now saving up those credits to be used after 2011. Check each company's website for their disclosure on distribution tytpes.

leslie said:

I think Chigu's criteria for buy stocks (highest distribution) is absolutely nuts, but he did now ask re that.

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My criteria for purchasing trust units with the HIGHEST distribution is not going to by my ONLY factor. I will do the appropriate research as well, but I was curious as to why holding all the high distribution trusts in a TFSA would be disadvantageous?? The distributions regardless of what type will be tax-free.

Definitely want to hear other point of views and why this is a bad idea? There may be other risks out there that I am overlooking. Any help would be greatly appreciated.

Chigu said:

I am looking to exclusively invest my DRIPs in trusts (oil, gas, real estate etc), as they seem to provide about 8-10% dividend based on current dividends paid and the current market price/unit.

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Can you please explain why you wish to initiate your position at this time instead of waiting until 2011, esp. non REIT positions?
Distributions are sure to be cut in 2011 when most trusts are forced to convert to taxable corporations.
Why not wait until a couple of distribution periods after the conversion and then take your position?
It'll be great if you can explain your strategy.