DRIPs

For Canada, there are basically 2 ways to DRIP stocks.

    First Way (Through a broker )

This is really a pseudo DRIP.  Your stock must accumulate enough dividends (at the time the dividend is paid) to purchase whole shares only. The dividends get reinvested automatically and what is left over from the dividend gets deposited into brokerage account.

 Pro's :

• MORE CONTROL over the purchase price when you make purchases.
• Able to purchase more companies.

Con's

• You dividends have to be enough to accumulate whole shares only, or else, the remaining dividend gets deposited into your account.

NOTE: Some companies provide a discount on purchase price for shares received from reinvesting dividends. Some brokers honor this discount like TD Waterhouse. Questrade does't honor the discount.

Second Way (through a transfer agent)

You can acquire the shares in 2 ways. You can purchase shares through a broker and then register the shares in your own name. You can by them privately. For more in detail about this go to www.dripprimer.ca.  Derek Foster also wrote a book called The Lazy Investor that you can get more info on this topic.

Pro's

• Purchase stock without paying commissions.
• able to purchase fractional shares ( Note: some companies do not allow purchase of shares )
• Entire dividend gets reinvested
• You receive a discount purchase price on reinvested dividends if a company does it.

Cons:

• Do not have any control over the price of when you buy your shares.
• You can only purchase additional shares of a company at a certain time.

Disclaimer : 

 

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.