Talk:Dividend reinvestment plan
Certificate Safekeeping I checked 5 different plan circulars for Canadian DRIPs and none mentioned certificate safe keeping. This is a non-Canadian phenomenon. Jon202ca (talk) 23:29, 7 July 2008 (UTC)Jon202
In response to message above: Sorry, I reverted your undo before reading the message here.
The Canadian DRIPs that I'm familiar with do not send you certificates unless you explicitly ask for them. Instead, they just keep accumulating the shares in an account maintained by the transfer agent. You can also send in shares you hold in certificate form to be simply added to the account maintained by the TA. Canadian DRIP circulars don't use language like "certificate safekeeping"... instead, they just explain you don't get the certificates unless you explicitly want them.
Take for example the program offered by Bank of Nova Scotia: http://scotiabank.com/images/en/filesaboutscotia/8829.pdf
"Certificates for common shares issued or purchased under the Plan will not initially he issued to participants but will be registered in the name of the Agent or its nominee. The number of common shares issued or purchased under the Plan for each participant will be credited in a Plan account established for that participant and shown on such participant’s statement of account. Upon written request of the participant, the Agent will issue share certificates registered in the participant’s name for any number of whole common shares held for such participant’s account under the Plan."
Another example from the Enbridge program: http://www.enbridge.com/investor/stockInformation/dividends/pdf/drip-jan72008-english.pdf
"Generally, Common Shares purchased through the Plan will be held in the name of the Trustee for a Participant and reported on the Participant's statement of account. This service protects against loss, theft or destruction of share certificates. However, a Participant who requires a share certificate but who does not wish to terminate participation in the Plan may obtain a certificate for any number of whole Common Shares held in his or her account by written request to the Trustee. A certificate will not be issued for a fraction of a share. " —Preceding unsigned comment added by 126.96.36.199 (talk) 18:33, 29 August 2008 (UTC)
I think the confusion here is with the issuing of NEW shares (either through the DRIP or SPP) with the initial, or ANY other share certificates. Yes I am aware new shares are issued through a "book based" holdings. In the U.S., you can mail in a certificate you possess and have them integrate that into your book holdings or simply "safekeep" it. In Canada, this is not available. As such, for Canadians to start a DRIP you must start with a certificate. After that, you either have hold onto it yourself, or transfer/sell it. Also, I am 99.9% sure Canadian transfer agents will not add any certificate to you "account" holdings and effectively cancel the certificate. If they do, then it is a recent service which is a good thing. I will look into it. Jon202ca (talk) 01:40, 2 September 2008 (UTC)
I emailed Mellon and once shares are issued in certificate form, they cannot be deposited back to "book-form" entry. So you are stuck with the certificate unless you transfer it to someone, or deposit it with a brokerage account.
Email from CIBC Mellon
Dear shareholder. Thank you for your inquiry below. Please note that shares in certificate form cannot be converted into book-entry form in our records. Only shares part of a dividend reinvestment plan are held in non-certificated form for the duration of the plan.
Mutual Fund Dividend Re-investment
Please provide some context!
This article starts with a statement about tax liability, with no indication which country it applies to. It then goes on to discuss dollar amounts and Canada. Is it giving specifically Canadian tax law? Or is this article equally applicable in, say, Tanzania? 188.8.131.52 (talk) 19:48, 31 August 2010 (UTC)
U.S. 801 (k) plan
It's just a glorified way of calling a dividend reinvestment plan (DRIP). They've been around for a long time. The trick is finding the right investments that return double that of a 401k, hence the term "801k" (for which there is no IRS code named after it). Read more: http://wiki.answers.com/Q/How_does_an_801k_plan_work#ixzz1xr0yfiqY
There is no "free" reinvestment plan
Another negative with automatic stock reinvestment plans is that they are subject to the broker using the dividend to speculate on the share price. When a company announces a payout day for their dividend, Fidelity (for instance) says that they "purchase" a block of stocks, with their own money so it is claimed, before the payout day. How they balance this risk with puts/calls I am not 100% sure about, but the way they benefit every time is that, if the price goes down per share, your dividend gets you less stock in reinvestment because it's based on the higher price. It doesn't take genius to know how this can be manipulated to provide huge profit by shorting the small investor of a few dollars for each share. With volatile stocks, this could reap huge rewards for them with such a plan since the are doing the same for thousands of investors. So no matter what the company claims, reinvestment plans at no upfront charge are in fact charging the small investor, in fact it cost much more than if they simply bought the stock themselves and paid the brokerage fees.184.108.40.206 (talk) 19:55, 16 May 2013 (UTC)