RE:RE:Dividend PolicyTo help you Power_Auditor cause you still don't seem to understand maybe after this you will figure out your own question and stop harassing me for your answers and stop accusing me of saying things I didn't. Learn to read my friend and please before you spend anymore money in the stock market go grab a book. I recommend "The Intelligent Investor" by Benjamin Graham. I'm done responding to you after this. And will be joining the list of people ignoring you.
How DRIPs Work
Before someone buys shares in companies through a broker they are required to sign a power of attorney. The power of attorney allows the broker to act as owner on a person’s behalf. Companies often bestow benefits, such as free dividend reinvestment, to an owner. When an individual’s shares are held in an account, the company recognizes the broker as the owner. Benefits of ownership go through the broker.
Brokers hold a person’s shares in street name. If a company-stated minimum number of shares are removed from street name, the individual, not the broker, is recognized as owner. The owner can then enroll in the company DRIP. The minimum number of shares required to enroll in most instances is one (1). It is important to make sure of the minimum before attempting to enroll in a DRIP. As an example, Pepsi requires five (5) shares to start a DRIP. Once enrolled, any benefits are now directed to the individual, not the broker.
Benefits in a pure DRIP, such as TD Waterhouse (TSX:TD), allow any dividends payable to be reinvested in further shares at no cost to the shareholder. If a company, such as Bank of Montreal (TSX:BMO), offers a DRIP with SPP the individual can also, on an optional basis, purchase further shares as well in dollar amounts directly from the company (up to $40,000 annually from BMO). Thus, broker fees are eliminated.
It is important to note here that the vast majority of active DRIPpers actually use the term DRIP when they mean DRIP + SPP. This sometimes causes confusion, especially when someone asks their broker about DRIPs. Brokers offer Synthetic DRIPs. Synthetic DRIPs mimic pure DRIPs but only offer SPP features if the individual pays the further broker commissions!
https://www.tdwaterhouse.ca/products-services/investing/td-direct-investing/investment-types/investment-plans.jsp
A Dividend Reinvestment Plan (DRIP) allows you to purchase additional shares or mutual fund units automatically from the cash dividends paid on eligible securities, without incurring commission costs. TD Direct Investing handles everything directly for you — from dividend collection to reinvestment and safekeeping.
To set up a DRIP in your TD Direct Investing account, contact an Investment Representative:
- 1-800-465-5463 or (416) 982-7686
- 24 hours a day, 7 days a week