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Was reading a few threads about DRIP's and I thought the whole process was a bit of a PITA having to secure one share... yada, yada, yada.....so I called TDW to check on it and the rep checked my accounts and converted all the stocks that were eligible to DRIP's. Half were treasury DRIP's so I may get some at a discount but at least I will save the commissions and do a bit of DCA.

5 minutes and it was done - cool and another thumbs up to TD. My experiences with their reps has been top notch all the time.
 

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The PITA to secure one share is to set up a classic DRIP where you can accumulate fractional shares.

Doing it through TDW won't net you any fractional shares, so any leftover dividend payout after whole shares are bought are given to you back in cash. And if your payout is insufficient enough to cover at least 1 share, no DRIP, just cash.

May not matter too much if your stocks are priced low enough, but if you own IBM at $190, you'll need almost $40,000 in stock to give you enough of a quarterly dividend to DRIP you 1 share. Otherwise, no DRIP.
 

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np, but the amount invested in a single stock is meaningless. It's what the dividend payout is and how much it costs to purchase a single share. If you're leaving a lot of fractional shares on the table (like .8-.9 every month), those do tend to add up over time, especially if the stock price is high.
 

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Yeah, just to add to what lightcycle said:

Both traditional and synthetic drips, drip without any transaction cost.

With a broker in a synthetic drip, yes you have to ensure that you would obtain minimum 1 share with your dripped dividend/distribution per payment date.

If you need to look up some of the discounted shares you can find a list here: www.dripprimer.ca
 

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+^ We find it a beneficial way to reinvest the cash spun off by our dividends. Another example would be BCE. If you bought 100 shares today, you'll get a dividend of $61.80 per quarter. That will buy 1 share per quarter (if price was to stay at the current $47.86). The other $13.94 will go into cash in your account. But if you owned 155 shares, you'd be getting enough to buy 2 shares and leave very little to go into cash.

We like the idea that the initital purchase is collecting a 5.18% dividend (eligible cdn), and the cash from the dividend is being reinvested for another 5.18% (again assuming a $47.86 price). As long as you continue to like the underlying company, and are content with the return rather than large capital gains, you just enjoy the slow drip. At some point in the future you go back to cash to supplement your income.

The attached graph shows our BCE growth - left axis is cum # of shares owned, right axis is cum price to purchase and current market price. The rapid increases in # shares are times we bought more shares. So today, nearly 1400 shares with a cost (incl drip) of $40k and a value of $65k. Our cost to buy net of the drips was $29k for 1100 shares. Present annual return on our cost (incl drips) is 7.2%. A couple of other notes, there was a small reduction in shares in '06 that were spun to us as Bell Aliant, and two quarters in '08 that Bell did not pay a dividend (according to our notes). Not much growth till we loaded up on shares in '10. Prior to that the dividend was over 5% but 200 shares had only grown to 220.

View attachment 491
 

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Like jacofan,

I also like commission free shares with the synthetic DRIP and stocks cheaper via DRIP discount. It's free money, most people should take it.

The good thing about DRIPping is, once you have enough stocks in the portfolio, the leftover cash from the DRIPs accumulates as well and you can use that "leftover" money to make another new stock purchase or purchase more shares of the same stock.

The true, full DRIP, has some headaches but that's only associated with ACB in my opinion.
 
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