[Spudd]

Just thought I would post an update as to the status of the USD DRIPs in TDW RRSP's. I got a DRIP from VTI on the 27th.

VANGUARD TTL STK MRKT ETF
CONVERT TO CAD @ 1.04600
DIV
290
$149.85

VANGUARD TTL STK MRKT ETF
DRIP
1
-$99.91

According to Vanguard, the distribution was .494 per share, so for my 290 shares I should have gotten $143.26 USD. After paying $95.52 USD for my dripped share (calculated based on the given conversion factor, and this seems a fair price for the day), that leaves me with $47.74 USD cash. Subtracting the DRIP from the dividends, I end up with $49.94 CAD, which multiplying by their conversion factor, comes out to exactly $47.74 USD.

So, I think the dripping of USD dividends is now working.

 

[CanadianCapitalist]

It looks like USD DRIPs are washed in a TDDI RRSP. Does anyone know the VTI DRIP price in USD?

 

[GoldStone]

I got my Vanguard dividends in cash. TDW took their usual pound of flesh on the exchange rate.

Why can't they implement a similar patch for dividends in cash???

This is rhetorical, of course. We know why.

 

[humble_pie]

I got my Vanguard dividends in cash. TDW took their usual pound of flesh on the exchange rate.

Why can't they implement a similar patch for dividends in cash???

This is rhetorical, of course. We know why.

definitely, rhetorical.

when they wrote to me in october/13 about the upcoming patch, i promptly wrote back to request that they patch *all* US dividends in registered accounts.

converting *all* USD dividends with no FX fee would be a giant public relations victory for TDDI, i suggested, as persuasively as i could. The announcement would have drama, excitement, robust strength, would reassure so many disappointed clients, i said. It would be so much better than converting DRIP dividends now at no FX fee but the remainder of the dividends later, whenever they get around to launching a true USD dual-currency rrsp, i said.

nyet, replied the high-level mandarin. We have no plans to convert all USD dividends [at favourable rates] at this time, he said.

i didn't say anything more. It had been a monstrous 2-year mega-effort just to get them to admit, at this high level, that they were, in fact, scandalously charging double-dipped FX fees twice on USD DRIP dividends. Had been doing this for years. While never informing clients properly.

but i thought to myself that their partial gesture with respect to DRIP dividends only was weak, niggling & somewhat inappropriate, given the circumstances.

let us not forget that all other brokers, with the exception of those offering true dual-currency registered accounts with true USD tracking, are doing the exact same thing. They are charging double FX fees on USD market DRIP dividends. Even worse, most of the time their call centre representatives will deny it.

from the research i did, i believe that the double-FX problem may commence in the very CDS system itself. Like the broker's leased ISM mainframe systems, CDS would be using very old legacy systems, with parts perhaps dating even as far back as the 1950s or even before the arrival of MS DOS.

decades ago, of course, there was never anything like the hi-volume USD traffic that brokers & investors genuinely require today.

the foregoing is the brokers' excuse; however i for one am not sympathetic.

 

[humble_pie]

now is the time to lob into the discussion the fact that the broker industry has contacted some - but not all - of the 20 or so canadian companies that pay their dividends in USD.

reportedly the brokers have asked these companies to *do* something to help their street/nominee shareholders, who are, these days, the vast majority of shareholders (most of us are street or nominee shareholders, holding our shares at brokers.)

the brokers have not offered to eliminate their predatory FX fees on those USD dividends when those shares are held in CAD accounts, which is most of the time. Rather, the brokers have encouraged the dividend-paying companies to do something on their own to help their street shareholders.

remember, officially the companies are not even supposed to know who the street shareholders are!

reportedly, barrick & potash have been so contacted. Thomson has told me that they were not contacted. Nobody seems to know who has done the contacting, but my guess is it would have to be either the IIROC or else the little-known but powerful Association of Securities Administrators.

reportedly, one company (potash) is trying to do something about the issue. Reportedly, potash will be told, by brokers, the currency in which an investor has bought the interlisted stock. That will be locked into POT's data base & dividends will be sent in the same currency, to that same investor, for the rest of eternity.

the problem with this system is that the present freedom to journal stock back & forth from one currency to the other (which we have with brokers at present) (save & except for monocurrency registered accounts, of course) ... this marvellous freedom will vanish.

it's understandable that a dividend-paying canadian company will not be able to keep up with journal crossings that an investor may do, after the initial purchase, at the broker. A dividend-paying company is going to have to keep data costs down by locking in the currency of the dividend once & for all.

but i believe that, as investors, we are much better off having the freedom to journal stock back & forth from one currency account to the other, which is the present system.

 

[uptoolate]

Thanks for the update HP. Ever hopeful here!

 

[gibor365]

I published in another thread on Dec 12 "Today got email from TDDI manager that :
"on November 29th we launched the ability to have a DRIP for US dividends so that there is not a currency conversion rate charged. Please see the note below:

Dividend Reinvestment Plan (DRIP) FX Auto Wash Program: New program created to ensure clients do not incur a currency conversion for U.S. dividends reinvested in Registered Plan accounts. The service is provided automatically, and clients do not need to call our ISCs to register.

Can anyone who has any US DRIP after Nov 29 to confirm?"
Looks like it's working?

 

[humble_pie]

... Ever hopeful here!

to be blunt i don't see much call for hope.

my own test stock running as a DRIP dividend in TD registered account is goldcorp, one of the 20 canadian companies that pay USD dividends.

for both the november & the december dividends - goldcorp pays monthly - the TD converted the USD dividend into CAD at the highest FX rate i've ever seen them use. They charged 1.55%; previously i'd never seen them charge more than 1.50%.

there was no "wash." They simply bought the new share in CAD. So i paid an FX fee that was the highest i've ever known at the big green.

of course i'm thinking about moving my registered accounts elsewhere ...

 

[uptoolate]

Well I'm with you but hope is all there is at the moment. Obviously they are very happy to skim off this money - the Golden Crumbs. As I have stated recently, I am seriously considering moving my children's accounts over to RBC before they accumulate enough complexity to make it a pain to do so later. Hearing you say that you are thinking of moving pretty much seals the deal.

 

[gibor365]

HP, wanted to send you private message, but got "humble_pie has exceeded their stored private messages quota ", could you please delete some?! wanted to ask you question

 

[mrPPincer]

Just thought I would post an update as to the status of the USD DRIPs in TDW RRSP's. I got a DRIP from VTI on the 27th.

VANGUARD TTL STK MRKT ETF
CONVERT TO CAD @ 1.04600
DIV
290
$149.85

VANGUARD TTL STK MRKT ETF
DRIP
1
-$99.91

According to Vanguard, the distribution was .494 per share, so for my 290 shares I should have gotten $143.26 USD. After paying $95.52 USD for my dripped share (calculated based on the given conversion factor, and this seems a fair price for the day), that leaves me with $47.74 USD cash. Subtracting the DRIP from the dividends, I end up with $49.94 CAD, which multiplying by their conversion factor, comes out to exactly $47.74 USD.

So, I think the dripping of USD dividends is now working.

Thanks for the update Spudd.
My shares of VTI payed out the div in cash at the same conversion rate of $1.04600 on Dec 27.
Sad thing is the BOC closing rate on Dec 27 for US$ was C$1.0704, which adds up to a whopping one-way conversion fee of C$0.0244 in TDDI's pockets on every US$.
Or, using the BOC noon rate for Dec 27, 1.0697, it's still an outrageous money-grab of $0.0237 on the dollar.

I published in another thread on Dec 12 "Today got email from TDDI manager that :
"on November 29th we launched the ability to have a DRIP for US dividends so that there is not a currency conversion rate charged. Please see the note below:

Dividend Reinvestment Plan (DRIP) FX Auto Wash Program: New program created to ensure clients do not incur a currency conversion for U.S. dividends reinvested in Registered Plan accounts. The service is provided automatically, and clients do not need to call our ISCs to register.

gibor, I didn't notice your other post on Dec 12; if I had, I would have switch on the DRIPs.
I wish TDDI would be consistent and inform everyone equally.
I've just double-checked through all my old e-mails and there was not a word about it to me.
Why am I not surprised that TDDI seems to want to keep it hidden when they could keep raking in those heinous conversion fees?

Can anyone who has any US DRIP after Nov 29 to confirm?"
Looks like it's working?

Looks like it's working from Spudd's post above.
Have not yet seen confirmation from a second person.

 

[gibor365]

gibor, I didn't notice your other post on Dec 12; if I had, I would have switch on the DRIPs.
I wish TDDI would be consistent and inform everyone equally.
I've just double-checked through all my old e-mails and there was not a word about it to me.
Why am I not surprised that TDDI seems to want to keep it hidden when they could keep raking in those heinous conversion fees?



Looks like it's working from Spudd's post above.
Have not yet seen confirmation from a second person.

I also didn't know it until Business Development Manager of TDDI sent me email...
From Spudd's post it's working, from HP's - not really
weird....

 

[gibor365]

Thanks for the update Spudd.
My shares of VTI payed out the div in cash at the same conversion rate of $1.04600 on Dec 27.
Sad thing is the BOC closing rate on Dec 27 for US$ was C$1.0704, which adds up to a whopping one-way conversion fee of C$0.0244 in TDDI's pockets on every US$.
Or, using the BOC noon rate for Dec 27, 1.0697, it's still an outrageous money-grab of $0.0237 on the dollar.

.

mrPPincer, thanks for publishing numbers! I hold US stocks in both TD and CIBC, but don't get dividends on the same day.... noe, I can compare.... and looks loke CIBC has much better rate.

On the same date I got dividends in cash from VEA: div in US 0.213 for 185 shares; I got in CAD 41.83(should've get in US 39.405), so my conversion rate was 1.061540414, much better than in TDDI (it can be even better comparing to USD DRIP in TD).
The strange thing, that I got the same day dividends from VTI with slightly different rate 1.061268556, but still pretty good, very close to BOC rate.
Do you hold LMT or CVX, so we can compare rates?

 

[Spudd]

I believe HP is talking about other issues -- that non-DRIP dividends in USD are charged a high conversion fee, and that Canadian companies paying dividends in USD are also being charged this fee even if they are dripping.

 

[humble_pie]

from Spudd's post the FX-free DRIP patch is working for traditional US investment vehicles with USD dividends.
however i do believe we could use more confirmations about this.
is anyone DRIPPing plain vanilla US common stocks in reg'd accounts? stuff like merck, microsoft, etc?

alas the patch is *not* working for the 20 big canadian companies that pay their dividends in USD, although this was promised.
like i posted above, my reg'd account was hit with a whopping 1.55% FX fee on the goldcorp december dividend.

the incoming USD dividend was FXed at 1.05250 on 20 dec/13.
on that day, the bank of canada noon rate was 1.0680, ie TD scored 1.55% for itself.

the big green did buy the new DRIP share on toronto, therefore there was no 2nd FX.

another disaster area imho is TD failure to properly train their staff, imho.
one of the things i had also requested - way back last may when the formal exchange of correspondence commenced - was that they train their staff to a standardized response.

they haven't ... re my ratty little goldcorp dividend, a belligerent TD rep insisted there had been no FX fee, even though the numbers (above) were staring him in the face. He also tried that goldcorp pays in CAD (it doesn't.) He also tried that the goldcorp USD dividend had been paid into US money market fund in USD (it wasn't.) At all times, he was clearly in over his head.

on this subject - adequate vs inadequate staff training - i've recently been mildly impressed to hear BMO investorline reps beginning to speak voluntarily around the edges of this complex issue. One senior BMO rep was telling me the other day how he does try, whenever clients ask him about USD dividends from the 20 canadian companies, to pro-actively inform such clients that a USD cash or margin account is always available to them, where they can hold such stocks in order to protect the dividends.

i chuckled a little bit when he confided that the concept can be difficult to explain to some clients! ah knows what he means!

 

[humble_pie]

I believe HP is talking about other issues -- that non-DRIP dividends in USD are charged a high conversion fee, and that Canadian companies paying dividends in USD are also being charged this fee even if they are dripping.

Spudd there are a lot of closely-related issues & you are one who is very good at keeping them sorted out ... but no i was talking about my test DRIP in reg'd account.

i have 700 goldcorp there - enough for one DRIP USD dividend each month - in TD reg'd account. I'd picked goldcorp because it pays every month, therefore i could track it closely.

things are not going well. TD hit up the GG december dividend - when i bought, i'd paid in USD for goldcorp on NYSE - with a 1.55% FX fee, exactly as in the past.

as for parcelling out the observation duties, you're doing USD dividend-paying ETFs, right?
me, i'm doing the 20 canadian payors of USD dividends.
it remains to find someone who's DRIPPing regular dividend-paying US common stocks & hear about their experience ...

 

[gibor365]

the incoming USD dividend was FXed at 1.05250 on 20 dec/13.
on that day, the bank of canada noon rate was 1.0680, ie TD scored 1.55% for itself.

In Investot Edge I got rate exactly 1.068 for G div

 

[mrPPincer]

Do you hold LMT or CVX, so we can compare rates?

No, but I have some VWO which payed the dividend on the same day, Dec 27, (in the morning I believe, so that could have something to do with the big difference in rates between CIBC and TDDI, if CIBC settles later, because the BoC closing rate the day before, Dec 26, was 1.0619).

My 308 VWO shares payed a div of US$66.53 and TDDI converted it to C$69.59 using the same conversion rate of 1.046 that they used for my VTI, much worse than the rates you're getting with CIBC.

 

[humble_pie]

In Investot Edge I got rate exactly 1.068 for G div

interesting ... thankx for the info ... the fact is that this (unjust or hidden FX fees on USD dividends) is a known issue that is beginning to ferment, like yeast, across the entire brokerage community. Oh, the power of the pen!

it looks to me like CIBC is working to deal decently with the issue. You got a great rate there, gibor.

 

[gibor365]

Yes, looks like CIBC rates are much better... want to see 1 more confirmation for US div payment...
Looks like numbers Rob C. article in Globe and Mail about brokerages rating not so correct (unless CIBC has some special rates for dividend conversion)...
Although I recall that about 2 years ago when I bought 2 different US stocks at the same date in TD and CIBC, CIBC rate was also better...
The biggest issues I have with CIBC, it's "gambiting" always need to call them