Discount Broker Overview for Dividend Investors

Questrade Democratic Pricing - 1 cent per share, $4.95 min / $9.95 maxIt’s always a pleasure to be featured in the Globe & Mail by Rob Carrick and this week he highlighted my RBC Direct Investing Discount Broker review. Since I have been investing, I have used 5 different discount brokers (not so discounted back in the day though) and it’s a competitive market out there. One year broker A is ahead and the next it’s broker B. They catch up to each other and try to outdo each other until they have spent enough money :)

I realized after looking at the Globe & Mail Discount broker review Rob had done that I had done the review from my investing requirement perspective – fees were totally omitted because my investing accounts are large enough to have the lowest trading cost with all of them. Along the same line, the Globe & Mail review did not take into account the most important requirements for my dividend investing strategy.

Dividend Investor Requirements

There are 2 main requirements that I must have with a discount broker for my dividend investing strategy. It must:

  1. Support DRIP (Dividend Re-Investment Plan)
  2. Provide the DRIP discount

DRIP is a powerful concept as it allows me to always have my money at work and to generate compound growth. Money at work is more important at this early stage for me than to pick my purchase price so I let it ride.

Discount Broker Comparison

This table is strictly setup to highlight what I need as a dividend investor. If you are an ETF investor, ScotiaITrade might work better for you since they have free ETF trading on certain ETFs. As you can, the spreadsheet presents quite a different view than the Globe & Mail review list.
Discount Brokers


As you can see, there are no non-bank affiliated discount brokers as I knew already that DRIPing wasn’t possible with Interactive Brokers from an email inquiry at the time. I am not excruciatingly picky either on all aspects of a discount broker. As it turns out, I am starting to move my banking over to RBC as well since Scotia is not willing to waive my bank account fees and with multiple products, RBC will. I know there are options for free banking since my wife is with Coast Capital Savings but it’s much easier to transfer money when you have an account with your discount broker.

Forex trading is probably the only feature I am missing now. It’s not something I need often but at least 2 times a year.

In the future, it might be interesting to turn the table into a grade since yes or no cannot always represent the extent of the feature. If you feel I am wrong in some cases, please bring it up as I have tried to get feedback from people who actually use them. For example, I heard that the customer service with Questrade is poor and I put no for it.

Readers: What’s making you stick to your discount broker?

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37 Responses to "Discount Broker Overview for Dividend Investors"

  1. Marc says:

    If your forex needs are simply USD/CDN, then Norbert’s gambit works quite well, assuming you’re using an account with dual currency.

  2. I’m with Questrade. Personally, I’ve never had an issue with customer service, they are always quick, intelligent and I love that there is a live chat option. I hate sitting on hold.

    I mainly stick with them due to their low cost. I’m just starting out, so for me, the small discounts for drip mean less than the half price commission. Once my portfolio grows to a sizable amount, I may consider switching out to my bank (RBC) thanks to your information.

    • The Passive Income Earner says:

      Thanks for commenting on Questrade’s customer service. It’s not always easy to rate without first hand experience. I will update it to yes. At some point I should really grade them instead of just yes or no.

  3. Russ McGillivray says:

    I am an RBC Royal Direct user because my banking is with RBC, but I have used BMO Investorline for 10 years for a church account that I manage. One thing that annoys me about RBC compared with BMO Invstorline is the almost total lack of options for investing cash short-term. BMO offers a wide selection of 30 and 90 day cashable GICs, and interest on investment account balances. RBC pays no interest and only offers RBC cashable GICs which pay less than is available from small trust companies at BMO Investorline.

    • The Passive Income Earner says:

      Thanks for the comment! Short term investing is a good one to have. Especially if it pertains to one’s investing strategy.

    • Marc says:

      @Russ – I’m also with RBC and have a High Interest eSavings account – it’s a good spot to park cash and gives a relatively good rate – currently 1.20%

  4. Dan says:

    Can you include CIBC Investors Edge in your comparison to make it complete.

    • The Passive Income Earner says:

      Sure thing. Do you mind getting the ball rolling and helping out on some of the criteria?

  5. Steven says:

    Very good info. I wish TD Waterhouse had BMO’s selection of cashable GIC’s. As of now you have to call and chat with a rep for the best rate and fill. Time consuming and so 1990′s.

  6. Steve says:

    Nice comparison. Do you know why TD Waterhouse does not honor DRIP discounts?

  7. John Buchanan says:

    I recently reviewed the online brokers and chose Virtual Brokers. Lowest commission, good customers service so far and easy and quick to move money in and out. No hidden fees that I have found. I don’t use DRIP as yet as my investments are leveraged and I want the cash. Questrade won’t let me operate with a zero balance. I thought the bank affiliated brokers commissions were too high when purchasing only a few 100 shares.

  8. D. Weasel says:

    Great post as usual.

    I’m with Questrade, and have had no complaints with their customer service. I like the on-line chat, very quick with good agents that know what they’re doing (at least the ones I’ve dealt with).

    The only problem I have had was on a trade execution. I was trading a TSX listed security, and somehow it was routed to the TSXV incorrectly. When I noticed it, I called, spoke with the trading desk, and had the situation resolved in under an hour with all my money back. First time that’s ever happened to me – good reason to always check your statements!

    • The Passive Income Earner says:

      @D. Weasel
      Thanks for the comments. Much appreciated to hear from different individuals.

  9. TraderDR says:

    CIBC Investors Edge has all the features above minus the DRIP discount and Free ETF. If you have over 100K combined in all accounts, it’s commissions are $6.95 per trade. Biggest issue with it is the dated platform(they tried updating it but pulled it due to issues, coming back eventually), for instance expired covered calls don’t clear till Tuesday which is ridiculous.

    I keep my RRSP there but use Interactive Brokers for my non-RRSP account. Commissions are far cheaper($1 per 100 shares Can, $.50 per 100 shares US) and execution is far quicker/better than any of the banks. This is a professional trading platform that makes the banks look like amateur hour. Only recommeded if you are fairly active and trade US stocks/options.

    • The Passive Income Earner says:

      Thanks for highlighting it. I will update my table this weekend.

      At the end of the day, I think they all do a decent job. Questrade is probably best for anyone starting and then it’s a matter of getting the features you need. The 6.95$ commission is nice but I don’t trade enough to really be bother for $3 :)

      • TraderDR says:

        If Interactive Brokers supported RRSP and TFSAs I’d move everything there in heartbeat. Not only for commisions but the real performance reports they provide, something else the banks don’t do well(or at all). I’d personally save at least $400/yr + a few hundred due to execution issues(having to call them while about option problems while the stock price moves against you).

        But I agree Questrade is probably the best for the average investor.

        • Mel says:

          I agree. IB is great. I have been with TDW for years, but their obsolete and buggy platform is sad and they have no ETA to fix or replace it. I desperately need to get a dual currency account since the banks charge a crazy amount for FX every time you get a div. They “wash” the buy/sell using money market funds, but they still grab a bit every transaction.
          My non-registered account with IB, I trade the USD/CAD myself paying only 2.50 for 25k. That would cost closer to 400.00 through the bank.
          I’m trying to check out RBC & BMO, but it is like pulling teeth trying to get a look at their platform before opening an account!

    • Dan says:

      When i called CIBC Investors Edge they said you would receive the DRIP discount. I tried to find the info on their website but could not find it.

  10. Maritimer says:

    Questrade has some issues. When you DRIP, the purchase price of the DRIP shares for stocks are different in Questraderweb then they are on your estatements and in account activity in Myquestrade. In Questraderweb, you click on detail for any position when viewing your positions and it tells you the price you paid of the shares.

    I was told Questraderweb platform shows the closing price as the purchase price as this is what Penson does. Penson suppose to keep track of this info for this. They told me that account activity and estatements is the correct DRIP purchase price.

    WHy would they allow this as it makes no sense to me that this error occurs.

    That is the only issue I have with Questrade.

  11. Dan says:


    When i called CIBC Investors Edge they said you would receive the DRIP discount. I tried to find the info on their website but could not find it.

    • TraderDR says:

      Free DRIPing is included, I’ve used it often before – there’s just no discount.

      Just call them and tell them what stocks you want DRIPed.

  12. Abigail says:

    Discount Brokers are becoming more and more popular as investors feel that their broker’s have failed them over the last couple of years. Discount broker’s are fully aware of this shift and we are seeing mass advisement campaigns by each to increase their market share.

  13. Great comparison! I remember back in the day when the commission was $29.99 per trade :)

  14. I use Sharebuilder for my dividend portfolio and it’s been great so far. It makes it very easy to keep track of everything. The free re-investment makes it very low maintenance as well. :-D


  15. El says:

    Lost money using Investorline. Frustrated. Bad trading system ever seen.

  16. Bet Crooks says:

    I’m not sure what the No’s in your table mean about BMO InvestorLine? They do offer a synthetic DRIP on many Canadian stocks and securities. They do not offer a DRIP on any US securities. They do offer a discount on the reinvested dividends if the company does in its own DRIP. e.g. if FTS offers a DRIP through ComputerShare then InvestorLine does too.
    It is a synthetic DRIP, no fractional shares are purchased, the balance goes into the account as cash.

    • The Passive Income Earner says:

      @Bet Crooks

      Thanks for your comment. From my inquiry at the time, that’s not what I was told but I am glad to review it now and keep it up to date! It looks like they are on par with the others when it comes to DRIP and discounts. I am disappointed that it doesn’t do it on US companies. I will have to split DRIP between CDN and US since it’s really important to be able to DRIP anything in my view.

      Cheers and thanks for stopping by!

  17. Kevin says:

    According to the information on the RBC Direct Investing website below, it looks that only Synthetic DRIP is available and there are also restrictions on the stocks.
    How does a Dividend Reinvestment Plan work and how do I enroll in one?
    With the Dividend Reinvestment Plan (DRIP), any dividends received from eligible companies listed on the S&P/TSX Composite indexes and the S&P 500 will automatically be reinvested into new shares at no cost. The reinvestment will only occur if the amount of the dividend received will cover the cost of at least one full share. The remaining cash will be added to the cash balance of the account.

    • The Passive Income Earner says:

      Only synthetic DRIP is offered by discount brokers. You have to use Computershare or Can Stock to receive partial shares. The later are company provided services and the employee stocks plans are usually managed by that company as well.

  18. Zareth says:

    I’m also a dividend investor and have been thinking of switching out of TD Waterhouse. I had originally planned to be an active trader but I guess life doesn’t always go as planned. I’m currently satisfied being a dividend investor though.

    Here’s my situation. I’m still fairly new to investing in general and only have around $6000 or so to work with. Currently, 89% of my investments are in dividend investments (banks) and none of them make enough in dividends to be able to reinvest them for each pay date. I would like to keep adding onto my current investments until I can use the DRIP plan for them. I’m thinking of switching to either Qtrade or Questrade. Qtrade says there are no fees for DRIP and Questrade has DPP with no fees attached.

    My question is, would I be better off with DPP and lower commission fees (Questrade) or would it be better to switch to Qtrade which offers no DRIP fees?

    I’m able to set aside $200-300 a month to invest with. Do you suggest that I wait and buy the shares every few months or would it be better to buy as soon as I am able to?

  19. gumby says:

    Virtual Brokers has a DPP which costs $1 per month per account. FYI

  20. BlueChip says:

    Can someone explain to me what a DRIP Discount is?

    I know with Questtrade you get up to 1% if the MER fee refunded back to your account which makes it very attractive when you are buying a mutual fund.

    • @BlueChip

      DRIP discount is from the companies directly and they allow you to purchase the stock from dividends earned at a discount. The discount varies and can be from 1% to 5% or even more but I have rarely seen that on the closing day of the dividends being issued.

  21. henry says:

    I have been with ShareOwners Investment Inc for years and have been very pleased with their service. There fees may be higher than the other brokers($19.95 per trade, or $9.95 for co-op trade).

    For me their big advantage is that they automatically re-invest the dividends received, regardless the amount (even pennies) and buy fraction of shares to 4 decimals. Those small purchases and fractions of shares add up over time.

    As for DRIP I definetly agree that Computershare offers the best service. They also allow you to have direct debit for one time or automatic withdrawals.

  22. Ronaldo says:

    WRT Bluechip comment: On most mutual funds most online brokers have the A class or i believe B class which charges the trailer fees of 1% (that normally goes to pay the full commissioned advisor who is managing one’s investments) even tho the online broker is not earning same because they are not giving any advise they pocket that – so paid them for nothing the 1%. Bluechip’s comment about Questrade giving back the 1% (although if memory serves me when i phone them it might not be a full 1%). It would nice to find a list or names of online broker that do not charge this for mutual funds (a different class of MF other than A class).

    As to answer to Bluechip at first confused in saying a 1% to 5% savings on dividend reinvestment as does not seem like much but in thinking over even a 25cent saving if a monthly dividend over time over 20 dividend stocks could add up over the years if that is what Passive income earner means.

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