[WarrenC]

Just curious as to how other Canadians contribute to US DRIP plans, and which ones. The only US DRIP I have right now is JNJ, and my only form of contribution just ended.

The plan is so strict that I could only contribute with a US dollar check. I had a US dollar account opened at RBC for this purpose, and other future US stocks. Something changed, and JNJ started rejecting the checks. I tried to inquire with them (Computershare) and RBC but got nowhere. Then RBC started charging me $4 month for the account so I closed it.

What do other people use for US contributions? I'd really like to keep up my JNJ purchases, and expand to other US stocks.

Thanks.

 

[stinsont]

I use CIBC's Investors Edge; they offer the service free of charge. Actually I hold JNJ in that account and it goes through no problem.

 

[Jon202]

Warren, you are correct. BMO and RBC were the only Canadian banks to offer Canadian US$ checking accounts, with cheques that could clear through a U.S. branch for "terrorism/money laudering" purposes. I did a page specifically for this concept:

http://cdndrips.googlepages.com/canadianbankingforusdrips

Both BMO and RBC terminated these plans, and RBC was the only one to offer a fee-based alternative linked to Centura.

To continue contributing to my U.S. DRIPs, I just opened a free Harris checking account, and their online application is open to Canadians.

 

[WarrenC]

Great info thanks Jon202.

Before I read into it more, do you know if Harris plays well with paypal?

 

[Jon202]

I don't see why not. It's a standard American bank checking account, with full ABA routing codes.

I plan to link my paypal to the Harris account once I get my checks.

 

[WarrenC]

Application sent. I opted for the "mail me the info" option rather than giving them my credit card for the initial deposit. Thanks for all the help, I'm looking forward to getting more US DRIPs.

 

[cannon_fodder]

Warren,

Do you hold these drip stocks in a non-registered account? If so, how do you justify the withholding tax and the (I'm guessing here) annual administrative hassles?

And when you refer to DRIP contributions are you including option to purchase additional shares at a discount or commission free rather than just simply reinvesting dividends?

 

[Jon202]

CF:
Generally when talking about "traditional" DRIPs as is the case with Warren's JNJ this is a direct ownership holding, transfer agent run plan, no brokerage. As with any U.S. dividend paying stocks held outside of an RSP, Canadians are subject to 15% withholding on the dividends regardless. There is no annual fee for JNJ nor most U.S. DRIPs. Some have a per-transaction fee.

Most plans stipulate that if you want to buy more shares through the SPP, you have to be enrolled in the DRIP. There is no re-investment discount for JNJ.

 

[WarrenC]

What Jon said.

To add to that, yes they are unregistered. I am docked the 15% withholding tax, but there are zero admin fees, or any brokerage fees for each purchase.

Why? Simply because there are companies out there (like JNJ) that are a lot stronger than anything Canada has to offer, unfortunately.

It is the only non-Canadian DRIP I own right now, but I will probably get into a few more.

I am referring to DRIP as well as OSPP (optional share purchase plan). Hence the need for an account where I can write cheques in USD. That is the only real hurdle in getting into US DRIPs.