thanks for the kind comments Toronto Vigilante.
Spock here are some answers (well thoughts) to your DRIP/SPP questions
1.For Canadian stocks main requirement is that at least ONE SHARE should be registered in my name?
Yes you need to have one share registered share in your name, for 90% of the plans, some require a higher amount ie. 100 shares. When you have a registered share you send it to the apporpiate trust company, ussually CIBC Mellon Trust or Compushare.
2. For US Stocks depending on the company this may or may not be a requirement. I can buy directly from the transfer agent for the company investing a minumum initial amount and then can buy through the optional purchase plan.
I think one can get the first share reqd thru
www.moneypaper.com or
www.firstshare.com for US Companies.
I have no US DRIP/SPP plans but if I do will use probably the Moneypaper, I read an article in the Cdn. Moneysaver and though it was well written did not understand all of it and had more questions. When I want to buy a US stock I just use on of my brokerage accounts, though in the future will probably set up US DRIP/SPP, tell you when I do.
If you are a US citizen the process is very easy through Buy and Hold or Sharebuilder. Phoned Sharebuilder, cost was $2.99 for each cash transaction, dividends were reinvested for free and fractional amounts were allowed. all of your plans on one statement, many to choose from. often had special offers to join, only problem not available to cdn. citizens. hopefully soon they offer this north of the border. huge amount of stocks to choose from. many did not have regular company DRIP/SPP plans.
3.What is the best way to have one share transferred to your name among Canadian companies?
You have two options:
1. go to a shareclub meeting like Cdn. Moneysaver, there are a few in your area. Most clubs at the start will have a chance to do trading before the meeting or have members who have some. Often sitting at their home, they can use a form (only did that once) more often they will sign the share over to you, on the back, your name, sin number, address, and they will sign it and have someone at a bank stamp it and sign it.
then you mail it to the correct trust, put a letter explaining that the share enclosed was signed over (see back) and you wish to enroll in the DRIP/SPP plan. you should also enclose a cheque to make you first purchase $100+ is ussually the amount.
the person involved will charge you (at least this is the way it works in our club) their average price (cost) or the market price what ever is higher. In most cases it is the market price. However check with the person selling it to you, by the way if the price at the close the previous day was $44.20, give the person $45, no need to worry about the change sometimes a few dollars extra as they are doing you a favour.
I would ask the people who run the club how a meeting works and that you are interested in buying some DRIP/SPP stocks, they can probably help you out. I pay when the share has been signed over to me, cash. some members even bring you a receipt.
2. the other option is a little more of a pain. you would buy a stock through a discount brokerage,and then register it.
costs will vary buy will run you around $60 dollars.
$25-$30 to buy it
$35 to register is in your name. check to make sure they will deliver it to you for free, should be free, they sometimes can send it to your home address or a bank branch.
I would get friends and family members to join. You can buy say 5 shares and agree to split the costs. you get 5 indivual stocks sent to you, send one in, make sure your account is set up, then sign over the others to family members, divide costs of register up amongst the 4-5. only costs them a few dollars more. they will have to wait around a month.
by the way good idea to send it registered. many people do not, but I do, record the share cetificate number before sending in the mail, and do not lose that. 90% I send registered, had a share of Riocan I sent away for someone it got there and did not register it. share was only $12. costs only $4 to register the letter, so why not.
by the way if you ask for them at a meeting see which ones you can get, and then start the process.
4. Lot of companies are now charging $5 or so at least for each purchase. Throw in the cost of the stamp and envelope to the US (almost costs close to a dollar or 80 cents) and I am wondering if it is worth having the DRIPs which charge the customer.
So If i am sending $100 to be invested in a company through the optional purchase plan I am being charged 5.8% as transaction fees. [one good thing about investing every 2 months or quarter can be that there is a chance that fluctuations can be avoided upto a certain degree - dollar cost averaging]. Do you think this is worthwhile.
I WOULD NEVER INVEST IN A DRIP/SPP PLAN WHERE THE COMPANY CHARGES FEES TO PURCHASE MORE SHARES, OR CHARGES TO HAVE YOUR DIVIDENDS REINVESTED. THE MAIN ADVANTAGE IS TO CUT DOWN ON FEES, WHEN YOU GO IN THIS TYPE OF PLAN YOU KILL THIS ADVANTAGE. ALSO MANY OF THE COMPANIES THAT DO THIS OFTEN KILL THEIR PLANS IN THE FUTURE, OR INCREASE THE FEES, WHY NOT THEY HAVE A FISH ON THE LINE. there are tooo many good companies that charge nothing for their plans than to bother with this. If you want the stock buy it through your brokerage account. avoid these like the plague.
5.Noticing how companies have started to go belly up suddenly is it a wise idea to accumulate shares that you may not be able to get at the best price or get rid of at the best price.
good question. my drip/spp plan consists of the following BMO bank of montreal,BNS scotia bank, CIBC, BCE, First Australia (closed fund that yield over 9% invests in Asian/Australia bonds, CGI (closed end cdn. equity fund), Enbridge (well run pipeline stock), Suncor (oil reserves 50years +), Alcan. Riocan (reit) 3% discount on shares when dividends are reinvested. yields close to 9%
Had CP buy they split up did very well tripling my money on them, also had Nortel pulled out some shares and sold them, Nortel DRIP/SPP shares lost 25%.
If I were you would not get a bunch of stocks, for instance do not get 20-30 stocks, that is crazy. get five or six no more than 8 and slowly build them up then get some more.
would have one of the banks, maybe all three, also a pipeline Enbridge, TransCanada, then fill the rest out.
my DRIP/SPP plan has outperformed most Cdn. mutual funds (average) and has done well. by the way if you have a large position would probably pull some out and put them in an brokerage account. (maybe write some covered calls on them).
most of my holdings will do well, cannot see any going to zero..........famous last words.......
use drips/spp, mutual funds, and a brokerage account, DRIP/SPP are just part of your investments.
good luck, as for websites will get a list of some good ones, some I knew have gone downhill.
thanks
selkirk
