DRIP stands for Dividend Re-Investment Plan. It is the corner stone of Dividend Investing as it allows your portfolio to re-invest the dividends and provide compound growth for your investments. No hypothetical compound growth from markets either since you can look at it just like you would when you look at interest. You can extrapolate what you would earn 5 or 10 years from now and you can even throw in some dividend increase as well. The different is in the tax rate.
Related: The Magic of Compound Growth
DRIP have done wonders to my accounts. My dividends grow by approximately 10% annually without adding any extra capital. The shares bought plus the dividend growth are all at work.
DRIP Account Options
Company or Full DRIP Plan
Company DRIP plans or Full DRIP plans are usually managed by a transfer agent such as Computershare or CST Trust Company. There are
Continue reading How To Setup DRIP Accounts?
A recent article by ‘The Weathly Canadian’ along with the comments had me reflect on the reasons I DRIP (Dividend Reinvestment Plan) and the conditions under which I DRIP. No investor scenarios are equal so it’s important to understand the benefits and what it means to your portfolio when you DRIP.
Before looking at different DRIP strategies and the benefits, let’s review the 2 different DRIP options.
Ways to DRIP
For lack of better term, Full DRIP refers to the Dividend Reinvestment Plan offered by the companies and managed by Transfer Agents such as Computershare and CIBC Mellon. Those plans allow you to participate in their Optional Cash Purchase (when offered) and to enrolled in the DRIP plan at no fees. Dripprimer.ca has a full list of all Canadian companies that offer Full DRIP.
I was watching the guest interview of Tom Cameron on Business News Network this past week where he highlighted the 10/10 rule utilized by his investment firms. It is very pertinent to dividend investors since it’s all about the dividend growth. In fact, 10/10 stands for a company that increases dividends for 10 consecutive years with an average of 10% or more growth in dividends per year.
It’s a simple screening test really. You can follow this process of elimination.
- Identify companies that have paid dividends for the past 10 years.
- Identify the companies that have increased their dividends by an average of 10% per year for 10 years.
Rather than focusing on the yield, it focuses on the dividend growth to accelerate compound growth. A consistent growing dividend under a
Continue reading Dividend Investing With a 10/10 Rule
The following is a guest post by Forex Traders
The past eighteen months have been nothing short of a rollercoaster ride for investors in our security markets. The influences of a European debt crisis, flights of capital to safe havens, lack luster recovery efforts in the advanced economies of the world, and upward spiraling inflation in our commodity markets have been a few of the “lessons” included during this period of uncertainty and volatility.
While economists are predicting more of the same for the next decade, the investor that does not enjoy the “thrill” of a wild amusement park ride has more reasons that ever to consider the wisdom of investing in corporate dividend reinvestment programs, or “DRIP’s” as they are commonly called in the investment community. The process involves registering with a company that offers a “DRIP” and then allowing this wealth accumulation strategy to work to your advantage. There are obvious benefits of not having to pay brokerage fees, dollar-cost averaging, and owning fractional shares, but there
Continue reading Reasons Abound for Investing in Dividend Reinvestment Programs
The TSX60 is an index that tracks the 60 largest companies trading on the Toronto Stock Exchange as measured by market capitalization. Those are the heavy hitters in Canada and I was curious of their dividend yields and which ones are also part of the Canadian Dividend Aristocrats.
I have crossed referenced the Dividend Aristocrats in green below that are present in the TSX60 for a total of 18 companies. If the banks had not dropped out recently, there would more.
Company Name Ticker Quote Yield Market Cap Royal Bank of Canada RY.TO $54.33 3.68% 77.43 Toronto-Dominion Bank TD.TO $76.11 3.21% 66.86 Suncor Energy Inc SU.TO $41.61 0.96% 65.03 Bank of Nova Scotia BNS.TO $57.43 3.41% 59.90 Potash Corp of Saskatchewan POT.TO $181.20 0.15% 51.53 Canadian Natural Resources CNQ.TO $44.95 1.33% 48.91 Barrick Gold Corp ABX.TO $47.84 1.02% 47.65 Imperial Oil Ltd IMO.TO $44.00
Continue reading TSX60 Index: Who is in it?
Image by alancleaver_2000 via FlickrLast year around May I started building my DRIP portfolio with Computershare and CIBC Mellon to slowly grow my dividend investment portfolio with no fees while leveraging the benefits of fractional shares. I have been sharing my process along the way and I recently completed the list of stocks I wanted to hold for now.
With many making new year’s resolutions around money and investment, I thought it would be a good time to share my list and why I picked them. I have to admit that reading The Lazy Investor from Derek Foster kick started my official dividend investment journey. I already had dividend investments and was aware of it, but I did not know I could do it cheaply! So cheaply with so little money!
My strategy around my slow Continue reading Dividend Investing: My no fee DRIP list of dividend stock is complete
The 2012 list is out and ready for your consumption!
Dividend aristocrats are often used to help guide investment decisions or at least filter down to a set of companies that have a proven record of increasing dividends. The most popular list is the U.S. Dividend Aristocrats which requires companies to be part of the S&P500 and to have increased their dividends every year for the past 25 years. That’s no small feat. Imagine the compound growth you get from 25 years of dividend increase.
What you need to do next is research and do your own stock analysis. The aristocrats are a good filter to start with but you often can only buy one at a time and your purchase price still matters.
If you want to get access to some quick stock research on a technical front, try one of the services below:
DRIP is short for Dividend ReInvestment Plan.
These plans are approved by the board of directors of public corporation and offered to shareholders. Most plans are similar in that they allow shareholders to purchase shares (including fractional) with the dividend cash earned by the company but the details can differ.
- Cash dividends can be reinvested to purchase shares (including fractional)
- Some corporation will provide a discount on the shares purchased
- Some plans will allow you to make optional cash purchase (OCP) at little to no commision
- When available, the optional cash purchase can have a minimum and a maximum
Fractional and discounted shares can really pay off over time. It accelerates the compound growth of DRIP investing.
Let’s take Fortis for example, it’s a Canadian Dividend Aristocrat and it has increased its dividends for 38 years.
Continue reading DRIP – Dividend ReInvestment Plan
Image via WikipediaI have been blogging about different subjects of investing and cataloguing my progress along the way and I thought I would take the opportunity to summarize some posts to help along readers wanting to start investing or at least to understand a number of key points when investing.
1. Understanding your account options
There are effectively 2 types of accounts: tax sheltered and non-tax sheltered accounts. Here are some posts I wrote on the accounts.
2. Understanding the tax treatment on your investments
Now that we understand what different accounts provide in
Continue reading Investing Starter Kit: The Knowledge You Need!
Telus has declared a dividend increase of .025 cents for a total of 0.525$ per quarter. It’s the second time this year that Telus has increased their dividends. This is a 5% increase over the previous dividends. More importantly, that’s a 10% increase for the year!
Telus Fact Sheet
- Quote @ 43.90$
- Yield @ 4.59%
- Year to date Telus is up 35%
- Trading at 89% of its 52-week ratio
- P/E @ 14.65
- Market Cap @ 14.68B$ (That’s pretty big for a Canadian company)
I have been investing in Telus through Computershare with 100$ per month deposit. This is a welcome news for my long term play. If you want to learn more about my full DRiP process, here are some previous posts: