Author Topic: Canadian DRIPS/Drippers  (Read 4524 times)

Mattamatics

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Canadian DRIPS/Drippers
« on: February 15, 2012, 09:13:58 AM »
Hello All

Question for anyone who currently has CDN DRIPS set up (not artificial).
(Note - In Canada you cannot directly contact the transfer agent and purchase a share, you either have to purchase via a broker/discount broker (which based on my research costs at least $70 per co.), or have someone transfer you a share.)

How did you go about acquiring your first share? I visited the www.dripinvesting.org boards, but found them rather difficult to navigate or find anyone willing to sell (tsf a share). I've also visited a couple DRIP investing club forums but they appeared to be defunct for the most part...

Once you found someone willing to sell you your first share, did you mail them a cheque, electronic money transfer, meet in person? (I assume not)

I assume you had to (and that it is customary) to pay for the first share before the transfer takes place. So you had to do it in good faith?

What was the turn-around time that you experienced on this, from coming to agreement to receiving the share from TA? Any other additional info that one should consider?

Would anyone on here be interested in selling (tsf) me a share? If so let me know the company or PM me. Or if you know of a good DRIP club in Ontario let me know.

If there are currently no CDN drippers on here, anyone want to start? Perhaps we can organize a group buy? http://www.dripprimer.ca/groupbuy


Thanks

Matt

vwDavid

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Re: Canadian DRIPS/Drippers
« Reply #1 on: February 15, 2012, 09:31:16 AM »
I purchased my first shares two different ways:

1) ON the open market through my brokerage firm TD Waterhouse. To make it worth while (at the time I paid $29 a trade, now I'm at $9.99) I bought in sufficiently size lots so that I'd get at least 1 full unit reinvested each distribution period. For example I usually bought around 100 shares. I paid the $50 registration fee, received the certificates and went through a myriad of registration and anti money laundering paperwork to get it set up.

The first time is the worst and you have to do it twice probably- once at computershare and once at CIBCMellon. The process took months in some cases and I had to even update my soft credit report as they had my birthday wrong.

2) From a close friend in my city we exchanged some paper certificates. Even this process is lengthy. You have to sign over the certificate and get your home bank branch to certify it by someone that is qualified to do so and write a letter of exchange for the share. Then you have to deposit it by mail with the xfer agent. We paid each other by cheque.

IN THE END, would I do this again?

Knowing what I do now, and that my stash is less than 7 years from MMM style retirement I would not register DRIPs again. I would do soft DRIPs at my brokerage. I'm not even going to do soft DRIPs now I am going to do value cost averaging by collecting all dividends and reinvesting in the best value at the time.

If I was younger and knew retirement was 7+ years away and I really wanted to forget about the details then yes I would do DRIPs again.

If you have additional questions let me know.

jd

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Re: Canadian DRIPS/Drippers
« Reply #2 on: February 15, 2012, 10:58:31 AM »
I considered setting up DRiPs as well, but decided against it due to the hassle and expense.  Like vwDavid, I just collect the dividends (and my new cash) and buy a stock I think is good value at that time.

The only exception right now is in my TFSA.  Since new contributions are limited, I don't get enough dividends in that account to make it worth paying a commission to buy more shares, and there is a fee to withdraw the cash, I figured I might as well use DRiPs for those holdings for now.  When you DRiP through the brokerage, you still get any applicable discount, but AFAIK, most don't support fractional shares--you get the leftover amount in cash.

Daryl

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Re: Canadian DRIPS/Drippers
« Reply #3 on: February 15, 2012, 12:34:04 PM »
I actually just got signed up with some DRIP plans at the start of this year.  I used http://www.dripinvesting.org for the purchases.  I did have to put the money down up front and was trusting the other person, however I did verify that they had successful transactions with other individuals in the past.

I ended up buying 5 shares altogether (BNS.TO, BMO.TO, CM.TO, MBT.TO, TA.TO).

BNS.TO, BMO.TO & CM.TO were purchased first through one individual.  I initiated the purchase on January 4th I believe with an EMT.  BMO and BNS both use Computershare as their TA and CM uses Can Stock Transfer Agent.  BMO was the first share to come in around the 23rd.  BNS came a few days after that.  CM just arrived in the mail yesterday (Apparently CSTA is known for being a little slow).

The next share I bought was TA.TO on January 5th.  They use CSTA and the share just arrived on Monday.

Finally I bought MBT on about January 10th and it arrived 9 days later.

Overall I've been pretty impressed with the ease of getting things setup thus far.

Mattamatics

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Re: Canadian DRIPS/Drippers
« Reply #4 on: February 16, 2012, 02:13:43 PM »
Thanks everyone for the responses,

@vwDavid I really appreciate you providing your perspective/hindsight and reasoning behind it.  That's a good point that one's time horizon and purpose impacts whether the hassle of setting up drips(and purchasing first shares) are worthwhile. I'm (currently) thinking my MMM style retirement is somewhere between 5-10 years off. Though the drip is not my primary focus on income generation but would be a secondary source (primary being rental properties - hopefully)

@jd based on the (limited) research I did, I believe you're correct that no brokers support fractional shares, as well it was my understanding that not all support the share purchase discount.

@Daryl Thanks for the additional detail, and timelines (very helpful)