DRIP Update in Carnival of Personal Finance #425

Jacob at My Personal Finance Journey hosted this week's Carnival of Personal Finance.

You can find my DRIP Update article there, as well as, many other articles about Personal Finance.

DRIP Update

I have held a DRIP (Dividend Reinvestment Plan) in a few stocks since 2008. So time for an update.

China Mobile - CHL
I purchased 5.22 shares for $240 in 2008 and have reinvested the dividends. I now own 6.07 shares worth $326. 14% of the shares are from DRIP shares, and the return on my original investment is 36% (7.2% per year).

General Electric - GE
I purchased 73.75 shares for $1216 in 2008. I now own 85.81 shares worth $2119.48. 14% of the shares are from the dividend reinvestment plan, and the return on my original investment is 75% (14.9% per year).

My strongest performing investment in this group of DRIPs is ABV. The increase in shares is about the same, but a very strong increase in the stock price has made this a real winner for me.

Ambev, formally Companhia de Bebidas das Américas - ABV
I purchased 4.94 shares (24.7 shares after a 5:1 stock split in 2010) for $215 in 2008. I now own 28.36 shares worth $1088.90. 13% of the shares are from DRIP, and the return on my original investment is 506% (101% per year).

I chose to invest in ABV after visiting Brazil and finding their product everywhere. I recognized the company name when screening for available DRIP programs and chose to invest a few hundred dollars.

Overall, the stocks are adding 2.8% in new shares through DRIPs, plus the increase in the share price.  As time goes on, more and more of the shares will be from DRIPs. At some point down the road, I could either stop the DRIP, and take the dividends in cash, or sell the stocks entirely.

This post was featured in: The Wealth Builder Carnival #137, and Carnival of Personal Finance #425.

DRIP Investing

I've been researching options for DRIP (Dividend Reinvestment Plan) Investing.

I'm currently using BNY Mellon (Choose investment plan enrollment) . This is where my holdings for General Electric, AmBev, and China Mobile are. I enjoy the website, easy to use. You get an investor number, where holdings are grouped. My only complaint is that my GE and CHL holdings are under on number, but my ABV was issued under another. Note, there is an option to group IDs together if you have multiples, but this involves a phone call and I haven't done that yet. There are plenty of holdings to choose from, I'm thinking of adding American States Water Company (AWR) , and Waste Management Inc (WMI).

The other option that I'm looking at is Computershare. This is the transfer agent for Walmart, Coca-Cola, McDonald's, Exxon and so on. This looks like a good option and one I'm wanting to try soon. The only issue is that all foreign investors have to invest via a mail in form, no online access. I will report soon.

Note all of these require US funds drawn on a US bank. I've used RBC Access USA to establish a US bank account. See my previous post,RBC Access USA.

Dividend Reinvestment Programs and Direct Stock Purchase - Not So Easy For Canadians

I want to avoid brokerage costs as much as possible right now, as I would have to wait a long time to save up enough money to invest and to cover the brokerage costs. I investigated dividend reinvestment programs (DRIPs) and direct stock purchase programs. For a DRIP if you own at least one share, you can participate in dividend reinvestment through companies and their transfer agents. I found www.directinvesting.com is able to transact the one share and enroll me. Even better, in some cases with stock like General Electric (GE) you can participate in a direct stock purchase plan and buy stock directly from their transfer agent.

HOWEVER, you need to write a cheque, drawn in US funds on a US bank with a US address (Basically, the branch needs a 9 digit ABA transit number and has to be located in the US). Hmm, can't open accounts online anymore thanks to the Patriot Act and what not. No trips to the US planned in the near future. Alright, I've had an account with Bank of Montreal since I was six, maybe they can facilitate something....

"In regards to your inquiry, I can advise that, regrettably, BMO Bank of Montreal does not provide the facility you have requested. Please note that we do provide the option to open US Dollar accounts, however we are unable to set up accounts that are held at banks in the United States. I apologize for this limitation."

Well there goes that idea. I'm going to try RBC next, they have a program called RBC Access USA. It looks like it's set up for snowbirds and it looks like the accounts are held with RBC Centura bank. Not much information online, and you have to go in to the branch to set it up. Well Thursday is the day they're open late so wish me luck.