Fan of Dividend Reinvestment Plan (DRIP) - Part 2

4. How the DRIP price decided Price of market DRIP is straight forward. It is the price from open market plus transaction cost. Treasury DRIP is different from company to company, and time to time. Investors have to read the detail of the DRIP plan. It is very easy to find on company’s website, usually under “Investor Relation” section. Treasury DRIP could be bought by the underlying company through open market. It is just like “market DRIP” by the brokers. The price is based on the average of the actual cost incurred. Treasury DRIP could be purchased by the company (in most of the cases). The price is based on the Average Market Price, being the average of the closing prices for a certain period (from 5 days to 20 days). Some companies have discount for treasury DRIP. You don’t want to miss it. Actually, I never calculate the exact price should be.

5. My DRIP experience with Scotia iTrade and TD Waterhouse    I have been with Scotia iTrade and TD Waterhouse for long time. I have whole bunch of accounts with both of them, RRSP, RESP, TFSA and Cash Accounts.   Basically, my experience is very positive.   WhenScotia iTrade was eTrade, it only had market DRIP, it is called DPP (Dividend Purchase Plan). Frankly, I feel their DRIP price is always higher than TD’s market DRIP price. I guess it might be eTrade had less customer enrolling DPP.   Now, both provides treasury DRIP (you can take discount if applicable) and Market DRIP. I can see both brokers has the same DRIP price for treasury DRIP.   For Market DRIP, the price discrepancy varies from time to time. I feel TD always uses the open price on DRIP day, but not sure.   Scotia iTrade’s transaction activity statement is clearer than TD Waterhouse’s. On the distribution day, it credit cash to your account and debit as “hold”. Once the share issued by company reaches your account, it lists the cost of each share with discount and the residue cash.     TD Waterhouse’s statement is very rough, it only tells you how many shares and cash you get on the day you get the DRIP.      Both TD Waterhouse and iTrade can setup DRIP on a speicific stock as long as you hold it.      TD Waterhouse extended the service by providing account DRIP setting. All stocks you hold or will hold will be eligible for TD's DRIP service.      Scotia iTrade is conveniet at setting up DRIP through email. You can get email link from their website.     Another tip is if enrolling DRIP less than 5 days before ex-dividend day, you may still get cash distribution at the first time and you have to wait until next distribution to get DRIP shares. The reason is it takes time for the broker to send enroll information to Transfer Agent (i.e CIBIMellon and CompuShares).

Questions? Search it...