Comments on: DRIP discounts from BMO and RY

By: A Week in Review: Edition #2 | My Findependence Day

A Week in Review: Edition #2 | My Findependence Day — Fri, 06 Mar 2009 19:46:10 +0000

[...] 1 – Canadian Capitalist announces a few more Canadian banks are offering Drip discounts [...]

By: john

john — Thu, 05 Mar 2009 19:23:22 +0000

one thing that I plan on doing is using my DRIP portfolio to contribute to my TFSA. Everytime I get round lots I will request a certificate from computershare or the mellonheads and then deposit it with my broker. I just have to find a broker that will let me deposit into a TFSA free of charge. Then I will pay ZERO comissions and acheive discounts on shares purchased in some cases.

By: Four Pillars

Four Pillars — Thu, 05 Mar 2009 18:42:14 +0000

Thanks for the link!

I don’t think this program is large enough to really dilute the shares significantly.

By: 0xcc

0xcc — Thu, 05 Mar 2009 12:18:28 +0000

leigh: You should talk to TDWaterhouse, not Computershare. TDWaterhouse does offer synthetic DRIPs and I think you would get the discount. The one pitfall of the synthetic DRIP is you don’t get partial shares so the amount of your drvidend must be enough to buy one share (and in that case you would only get one share). Of course with BMO right now that means you only have to own around 40 shares or so.

By: leigh

leigh — Thu, 05 Mar 2009 05:15:49 +0000

Was hoping to participate in the new BMO DRIP, but I hold the BMO shares in my new TFSA at TDWaterhouse. Talked to Computershare and don’t think it’s possible to participate in the DRIP – any creative ideas on how to out there in this blog’s wealth of information? THanks.

By: 0xcc

0xcc — Thu, 05 Mar 2009 02:38:19 +0000

James: I would expect that the only new shares that are issued are the amount that result from the discount, not the entire DRIP amount. So using your numbers that would mean about 35,000 new shares, not 1.8 million. In any case it should be fairly easy to verify when next quarter’s results are announced.

By: James

James — Wed, 04 Mar 2009 22:42:34 +0000

JON202 – If the company offers a discount on their DRIP then yes they are issuing from treasury. No discount means they are buying on the open market.

CC – In terms of shareholder dilution consider this: BNS pays out almost $500 Million per quarter in dividends. If even 10% of that goes into a DRIP then BNS will be issuing about 1.8Million new shares every quarter from treasury. Depending how long they intend to keep that up, it will hurt for long term shareholders.

By: Thicken My Wallet

Thicken My Wallet — Wed, 04 Mar 2009 21:19:49 +0000

I feel like I am watching Back to the Future! DRIP discounts use to be offered by dividend paying companies before we all decided every stock should be a ten bagger and companies acted like start-ups no matter how mature they were.

Discount DRIPS, reining in of stock options, caps on executive compensation, EPS growth expectations in 5-10% year over year- looks like the market is coming back to the norm.

By: Canadian Capitalist

Canadian Capitalist — Wed, 04 Mar 2009 21:19:42 +0000

James: Thanks for pointing out that BNS has a 2% discount on the DRIP. The information can be found here:

http://scotiabank.com/images/en/filesaboutscotia/18745.pdf

By: Sampson

Sampson — Wed, 04 Mar 2009 20:08:33 +0000

I have the synthetic DRIPs turned on in my RBC DI accounts and have had the discount passed on, in some instances.

The problem with RBC DI (in addition to the all-or-none DRIP’ing) is that they do not even tell you which equities are (1) eligible for the synthetic DRIP, and (2) whether you’ll actually get a discount if one is offered.

I’ve had a few holdings where the company does offer a real DRIP program with discount, and its not passed on to RBC DI. They’ve got a magical list somewhere of all eligible holdings but you have to ask specifically on a case by case basis – sorta annoying.

The way to go if you want to pick and choose is as was mentioned to get a stock certificate issued, then register with the company yourself. The only problem is it costs $50 a pop – so if you’ve got a number of holdings, it gets very expensive very quickly. Over the long run, I suppose you may come out on top if the discount is large enough.