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Start to Finish Canadian DRIP & SPP Walkthrough
Chose a Company or Trust that offers a Dividend Reinvestment Plan (DRIP). Companies that offer these plans generally offer a regular dividend or distribution, making the plan attractive. Be sure to look for a Share Purchase Plan (SPP) that will allow you to BUY more shares in the future. CDN DRIP & SPP List lists all Canadian plans and details.
Research every aspect of the company. Beyond all their financial details, some topics of interest for DRIPpers are: Dividend increase frequency, how long dividend has been paid, SPP availability, discount on reinvested dividends, plan fees if any, minimum purchase amount for the Share Purchase Plan, etc. These details should be explained in the DRIP Circular, available online on the company's website.
In Canada, investors are required to buy their initial common shares on the open market (through a discount broker) OR through a private transfer. One (1) Share is enough if a Share Purchase Plan is available since you can buy more later, but if the Company ONLY has a DRIP and no SPP, many more shares are needed to be realistic. So BE 100% SURE you know what kind of plan the company is offering. You MUST get at least 1 Share of EACH company you want to DRIP/SPP.
1st Method "Broker": Buy your share(s) on the open market. This requires a brokerage account. A fee would be charged to buy your share(s), see the Canadian Discount Brokers page for a list of fees. Be sure the broker is still offering this service.
Organize a Group Buy to spread the fees evenly among participants. 1-3 days to settle.
2nd Method "Private Exchange": Find someone to transfer 1 share to you. If you don't know someone, try the Share Exchange Google Group or find an Investment or DRIP Club in your area. You would pay them the share value and a small fee for time & postage. Since only 1 share is required for Canadian DRIPs, that's most often what's offered. Seller may mail the certificate to the buyer or directly to Transfer Agent. Also seller can transfer 1 share from their DRIP holdings (Using a Transfer Form or Book-Entry Format/DRS ) to the buyer. 1-2 weeks.
Broker purchases: Call your Broker and request a Share Certificate in your name, a fee of $30-$50 is common. See Canadian Brokers page for a comparison. You will receive the certificate with YOUR NAME on it, place it in a SAFE PLACE. 1-2 weeks.
Private transfers: Certificate is mailed to the Transfer Agent to make the transfer official. Sometimes the seller will mail it in for you. A NEW CERTIFICATE will be issued with YOUR NAME on it. Sometimes the Transfer Agent mails the NEW certificate to the Seller and not the Buyer, so don't be alarmed if there's a delay. Keep this new certificate in a SAFE PLACE. IF the transfer was 'Book-Entry Based' via DRS then no certificate will be issued but the account and balance will still be created. 1-4 weeks.
DRIP enrollment forms and Circulars are can be found on the company's website, on the Transfer Agent's website or links for each company on the CDN DRIP & SPP LIST. Complete and mail it to the Transfer Agent. This must be done ONCE for EACH COMPANY.
If you are interested in buying additional shares through the SPP (if available), be sure to complete an Participant Declaration Form (Anti-Money Laundering) with your 1st purchase. This Declaration Form gives permission for a "soft" credit check done for identification purposes.
If you have any questions about filling in any of the forms, contact the Transfer Agent who manages the DRIP+SPP plan.
That's it! You're done! You're now investing Fee Free! When your first dividend is reinvested or your cheque is cashed and shares purchased, you will receive a Statement from the Transfer Agent with purchase details (purchase price, # of shares, etc). Most plans require cheques for optional purchases, but a few managed by Computershare allow one-time and recurring pre-authorized debit (PAD).
You will continue to receive regular statements detailing your stock holdings for each company. You can use basic spreadsheet as a DRIP Log to keep track of this information. Statement will also include a Stub or Form to use for future Optional Cash Purchases (OCP). Keep all records for tax purposes.
ComputerShare provides an annual statement of all transactions which means only 1 PDF / year for each company for record keeping.
DRIP/SPP schedules can be monthly, quarterly or yearly.
Only when you have bought more shares with an OCP, can you transfer (sell/trade) your certificate to someone else.
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