Author Topic: What to do with dividend distribution in a registered account?  (Read 1431 times)

tomatops

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What to do with dividend distribution in a registered account?
« on: January 09, 2017, 01:34:03 PM »
Any advice on this one?

Basically, my brokerage doesn't do fractional shares with dividends, so DRIPs are occasionally out of the question.

What y'all do with the dividends if they can't buy much or they would take too long to accumulate into something substantive enough to go back into the market?

Do you just let it sit there quietly or do you find a creative way to put the odd $10-$50 dollars to work?

Especially in registered accounts where I have no interested in triggering a withdrawal. I do know that some have High interest savings funds (HISAs) that pay interest, but usually you need $1000 minimum initial investment to begin with and it's typically less than 1% interest... which, no thanks.

Retire-Canada

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Re: What to do with dividend distribution in a registered account?
« Reply #1 on: January 09, 2017, 02:20:50 PM »
I often have $10+/- $5 or so sitting in each of my accounts. Whatever is left after buying as many shares as I can at the time. I don't really worry about it. It's too small an amount to be bothered with really.

Proud Foot

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Re: What to do with dividend distribution in a registered account?
« Reply #2 on: January 09, 2017, 02:43:43 PM »
Not sure what all is available to you but can you not invest in mutual funds rather than ETF's or individual stocks? I would find it odd for a brokerage not to allow you to invest in partial shares of a mutual fund.

Heckler

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Re: What to do with dividend distribution in a registered account?
« Reply #3 on: January 10, 2017, 04:55:36 AM »
With a $9.95 trading commission, I have the same problem, but compounded since My plan is to accumulate in my work RSP off my pay check, then transfer to self directed ETFs annually for no fee except my trading commission.  My personal ETF minimum buy limit is $2500 in order to keep my MER low, low, low. 

My self directed ETF accounts carry $50-$200 in cash DRIP left overs for months at a time till I contribute another lump.  Am I wasting returns for the sake of keeping fees low?

Are mutual funds no charge to trade in a self directed account that charges commissions?  I could see buying index mutual funds for short periods of time to put my cash to work.

« Last Edit: January 10, 2017, 05:18:38 AM by Heckler »

Heckler

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Re: What to do with dividend distribution in a registered account?
« Reply #4 on: January 10, 2017, 05:33:03 AM »
My worst case right now is $300 USD cash from Q4 2016 VTI because my brokerage doesn't DRIP US funds.  I've been considering the 4.3 MER to buy 2 units ($116 each @$9.95 fee) too high, so plan to wait a year till I drop in my collected biweekly contributions (I think y'all refer to it as a rollover?) from my work plan.

This means I will have collected $1200 USD in distributions from VTI that aren't working for me for a year.    We are talking about a USD account at a Canadian brokerage. My only holding in this account is VTI.

What would MMM do?

No, I'm not moving to Questtrade for personal reasons.
« Last Edit: January 10, 2017, 05:50:36 AM by Heckler »

GreatLaker

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Re: What to do with dividend distribution in a registered account?
« Reply #5 on: January 10, 2017, 07:49:59 AM »
I use a low-cost balanced mutual fund to invest cash. In my case it is TD Balanced Index fund (TDB965), but there are other funds available from TD and other fund companies. The minimum purchase is $100, so until I accumulate that much I just leave it in cash, and I pay no trade commissions on mutual funds. (I use TDDI for the Canadians on the thread. TDB965 is not an eSeries fund so should be available in any broker.)

I get monthly distributions on bond ETFs and quarterly dividends on equities. So monthly or quarterly depending on the distribution size I invest cash into the balanced MF. Then annually at rebalancing time I sell the mutual fund and rebalance into ETFs. I usually only buy ETFs in 100 share increments, so somewhere in the range of $2000 to $4000 purchases.

Under $100 or so cash I don't worry too much about.

Edit: here's some analysis on the fund I use: http://canadiancouchpotato.com/2010/09/27/under-the-hood-td-balanced-index-fund/
Edit 2: I also use the same fund for monthly RRSP contributions
« Last Edit: January 10, 2017, 08:24:13 AM by GreatLaker »

techwiz

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Re: What to do with dividend distribution in a registered account?
« Reply #6 on: January 10, 2017, 07:59:22 AM »
I am in the same boat with the $9.95 fee to purchase ETF's.

I have enrolled into the DRIP program which helps ,but there is always some left over funds.  I never seem to be in prefect asset allocation, but as long as it is small amount I choose not to worry about fully optimizing down to the last dollar.  I just include it with my contributions and reallocate it during my next rebalancing.


tomatops

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Re: What to do with dividend distribution in a registered account?
« Reply #7 on: January 10, 2017, 08:07:00 AM »
I use a low-cost balanced mutual fund to invest cash. In my case it is TD Balanced Index fund (TDB965), but there are other funds available from TD and other fund companies. The minimum purchase is $100, so until I accumulate that much I just leave it in cash, and I pay no trade commissions on mutual funds. (I use TDDI for the Canadians on the thread. TDB965 is not an eSeries fund so should be available in any broker.)

I get monthly distributions on bond ETFs and quarterly dividends on equities. So monthly or quarterly depending on the distribution size I invest cash into the balanced MF. Then annually at rebalancing time I sell the mutual fund and rebalance into ETFs. I usually only buy ETFs in 100 share increments, so somewhere in the range of $2000 to $4000 purchases.

Under $100 or so cash I don't worry too much about.

I like this approach and will probably combine both ETF and TD index fund investing once my distributions accumulate to $100 to make a minimum purchase and sell end of year to put back into an ETF with a lump sum. Smart!