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Full DRiP: A new beginning

Full DRiP: A new beginning

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I have been blogging about the benefits of DRiPing along with the different ways of DRiPing for the past week and I have just been initiated to the ‘Full DRiP’! I have been doing synthetic DRiPing for years now but ‘Full DRiP’ is a new venture to me.

All you need to do is get one share! Nothing else. The fee on getting the first share is actually low if you do it part of the groups. You don’t need to request a share certificate at all. I have done it 2 ways to acquire my first share in 3 companies.

Buy or exchange through another investor

I have bough my first share of Bank of Montreal (BMO) through another investor. All I did was ask on the ‘Share Exchange’ forum (See the DRiP investing resource center) to acquire my first share for the cost of the share + 10$ appreciation fee. The steps are simple:

  • Register on the forums
  • Post on the Share Exchange
  • Get in touch with whomever is selling a share
  • Pay the person (share price + 10$ for mail cost and thank you)
  • Wait a number of weeks for all the registration to happen

I am currently waiting to receiving confirmation from Computershare on my Bank of Montreal (BMO) share purchase/transfer.

Buy through a group purchase

Buying through a group purchase is when you cannot acquire shares from anyone when you want it. You can initiate the group purchase or simply participate in one. They fill really fast though, so you don’t want to think too long if you are interested. The group purchase is usually up to 10 people. The organizer will do the following:

  • Buy 10 shares + transaction fee
  • Request a share certificate (cost differs by discount brokers)
  • Fill out all the necessary forms for registration (group organizer and everyone else)
  • Register with Computershare or CIBC Mellon
  • Wait a number of weeks for all the registration to happen

I am currently waiting for my first share with Telus (T) and Enbridge (ENB).

It’s that easy!

It was really easy and not expensive at all when you participate in the exchange. The ‘underground’ DRiP groups are really good at exchanging and helping others. It goes a long way in reducing the entry cost. Once I am setup, I can decide when I do the optional cash purchase (OCP) and how much I invest (some companies have a minimum). Because of the lead time in getting setup, I decided to get setup with a group of shares all at once just to have them ready.

Will a financial advisor ever promote such investment? I doubt because they make absolutely no money. There are no fees to earn.

Financial Literacy

Getting my kids setup with DRiP this way is part of my financial teaching for them. Once I have my share, I can easily set them up. They will have years to see compound growth in action!

Happy DRiPing!

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12 Responses to "Full DRiP: A new beginning"

  1. Financial Cents says:

    Pretty easy indeed! I've been doing full DRIPs for about 2 years now (mostly Canadian bank stocks) and I love the fact I can fill out a form, write a cheque, write an address on an envelope, put a stamp on the envelope and voila! – stocks to be purchased at almost no cost!!! I like your choice in ENB. Cheers!

  2. The Passive Income Earner says:

    Thanks Financial Cents! This is the hidden gem I wish I new about years ago. It's never too late though.

  3. Jeroen says:

    Hi,

    Thanks for sharing. I am already a Div growth investor and have been thinking for a while of switching from my on-line broker to DRIP.
    I didn't know about the option of buying a first share through a group purchase. Can you tell me where you can find these groups?
    Thanks!
    Jeroen

  4. The Passive Income Earner says:

    @Jeroen
    In Canada, there is a forum you can find from this link http://dripinvesting.org/Default.htm (and it's in my resources page) where you can connect with local groups like Vancouver, Ottawa or Toronto. Those are the ones I know of. The way I got the shares was through the forum Share Exchange Board from the link I gave you. It's a very large group of people and they are very experience with the processes.

  5. sabeel says:

    @PassiveIncomeEarner,
    Great post. I have signed up with an online discount broker for synthetic drip and this article for full drip has opened up a new avenue for me. I am going to spend this whole weekend reading up on this and get started on the full drip.
    One question, you mentioned in this article that you dont need to request a share certificate at all. Any other site that talks about full drip says that this is absolutely necessary. Can you clarify?
    Also, whats your recommendation on broker? I found one list, but not sure how up-to-date it is.
    http://www.dripprimer.ca/canadiandiscountbrokers

    Cheers!

  6. The Passive Income Earner says:

    @Sabeel
    Let me clarify the 2 ways you can do it. By yourslef, you need to request a certificate, if you go in the forum here (http://dripinvesting.org/Default.htm), you will find a section for share exchange and that's how I got 6 of my companies. The beauty is that once you know someone with shares (which the forum kind of provides even with strangers across Canada) you can then pay for the share plus a 10$ appreciation fee (much cheaper than requesting a share certificate from the broker) then the person will transfer the share in your name and you go from there. I was a bit worried at first about scammers, but it actually works well. The forum is filled with people willing to help out.

  7. Bhaskar says:

    Hi

    I am totally new at investing in shares. I recently had to transfer company purchased Teva shares to a discount broker (Questrade). Questrade has DRIP available now and I would like to break up my holdings from one company to several which offer DRIP. Would you recommend working with Questrade or follow the path followed by you? Have you heard about Share-owners' Club which has a yearly membership fee and offers DRIP?

  8. The Passive Income Earner says:

    @Bhaskar
    Hi Bhaskar,
    Welcome to dividend investing. Investing through the Transfer Agents such as Computershare and CIBC Mellon let you invest regularly with little amounts. You can make small regular contribution monthly or quarterly depending on the companies. So you can start small and earn dividends that are also re-invested.

    In you Questrade account, you won't be able to get fractional shares from your dividend unless you earn enough to cover the price of one dividends. You usually need 2K$ and more depending on the stock price and the dividends. Based on how much money you have you could decide to buy a few companies that allow you to do synthetic DRIP. It means you can buy whole share from the dividends.

    In the end, it depends on the following:
    - Do you want your dividend re-invested automatically?
    - If yes, do you have enough to buy one share.

    Hope this helps. Good luck!

  9. Beginner_DRiP says:

    Hi, Thanks a lot for the nice article. This is s whole new thing to me, both investing and on top of that this DRIP concept. While I’m trying to grasp what you have written, can you please tell me how does it blend with TFSA account. Can I open a TFSA account and do this commission free DRIP?

    • The Passive Income Earner says:

      @Beginner_DRIP

      The only account available is a non-registered account so far. For TFSA, RRSP, RESP, you would have to go through a discount broker.

      Hope this helps.

      • Beginner_DRiP says:

        Thanks for the reply. It certainly helps. So, I guess since I have a lot of room left in my TFSA/RRSP accounts, I should first max these out before taking advantage of this no fee DRiP strategy. Right?

        • The Passive Income Earner says:

          @Beginner_DRIP

          I totally agree. You should focus on your RRSP/TFSA first. You can still DRIP within those accounts but not fractional shares. Depending on your income and where you are in life, RRSP has great benefits. See my post on how to maximize RRSP.

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