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Nov 2, 2009 7:15 PM
Last Post By: ghostryder
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Drip with SPP plans
Posted:
Oct 27, 2009 3:28 PM
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Hello,
Can someone help me understand how I can set-up DRIP's with SPP's plans. I'm new in the country and need a little help.
I understand that in order to enrol in the above mentioned plans, I must own a certificate first, document which would show that I'm a shareholder. I also understand that depending on the company, it can be as little as 1 share.
My questions:
1. Dumb question, but I am assuming that I first need to be a shareholder of EVERY company that I wish to purchase stocks from.
2. What is the quickest way to become a registered shareholder?
I have already opened an investor's edge account with CIBC, but I'm stuck how to proceed as I have read contradictory information and don't know which is correct.
Thank you.
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Posts:
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Re: Drip with SPP plans
Posted:
Oct 29, 2009 4:07 PM
in response to: rufus37
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Thank you rufus37, kind of you to have replied, unfortunately, even after reading many sources, I'm still confused because they say different things.
One says to open an online account, which I have done, but another says, no, don't do it that way because they offer a synthethic drip account, which means that they don't reinvest fractional shares & that you would pay commission for buying additional shares.
So, I'm at square one, back to reading some more to see where I can obtain shares & certificates to be able to enrol in the true drip account, the whole idea of course is to pay no commissions for reinvestments and SPP. I'm in my 20's and looking at 30 year horizon, so this set-up seems ideal, IF i can figure out how it works.
Thanks again.
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Re: Drip with SPP plans
Posted:
Oct 31, 2009 7:08 PM
in response to: robert85
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Best place to start is the dripinvesting.org link above and read the Drips 101 articles by Bob Gibb.
If you are interested in Canadian companies you really have only 2 options. Buy at least one share through a broker and then request them to send you the actual certificate. They will then send you the share certificate to you in your name. They will charge a fee for this. Once you have the certificate you will be able to enroll in the company's drip directly through the transfer agent.
Your other option is to buy a share from someone willing to sell (and transfer) to you. Once you have the certificate in your name you can enroll in the company's drip plan.
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Re: Drip with SPP plans
Posted:
Nov 2, 2009 1:04 PM
in response to: ghostryder
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ghostryder: you cleared my confusion and I just purchased the shares online and was told to call back in 3 days (after the shares settle) to ask for the certificate. Also called the transfer agent and they will mail me some package for me to fill out, so I'm on my way, thank u so, so much!!!!!!!!!!. When I asked the bank about the certificates, the CSR gave me a long list of reasons why I should not be doing this, lol, they want to keep their commissions, i don't blame them, we all want to make money, but this system is too good to pass for buy & hold situations. The commission bit was not the only negative, but also i did not like the fact that the bank drip system did not include partial shares, this can also add up big in time.
How about US drips, do they work the same as Canadian? So far, all I know is that there is a 15% withholding tax on stocks from US companies. I'm thinking of purchasing a few from Ford & Coca Cola, but i'm not sure about other details so i'll get some books on that.
Cheers!
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Re: Drip with SPP plans
Posted:
Nov 2, 2009 7:15 PM
in response to: robert85
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I can't speak to US drips. I don't have any currently. All of my US equity exposure is in my RRSP for a couple of reasons. 1. No 15% withholding tax on US dividends in RRSP and 2. since US dividends are treated as income in Canada and taxed accordingly I prefer to defer this tax liability. Canadian dividends are treated more favorably tax wise so I hold them non-registered at this time.
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