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.

2007 Top Marginal Rates of Tax for Canadian Dividends

I've been researching into the tax implications of having various dividends and capital gains. I found a good resource from Grant Thorton LLP which I've shared here. Simply put in each province, when you combine federal and provincial tax rates, you're going to get taxed at a different rate depending if you declaring interest income, capital gains, foreign, eligible, or other canadian dividends. An eligible dividend is declared when it is awarded by a Canadian company. You will pay the highest rates of tax on common interest and on foreign dividends.