Recently, while discussing dividend investing with a friend, the topic of DRIP (dividend reinvestment plan), specifically synthetic-DRIPs, came up on Canadian companies. Both he and I invest in companies through a discount broker, which does not support full DRIP and the discussion revolved around total investment dollars needed to DRIP in each company. This gave me an idea to compile the Canadian Dividend All-Star list of companies to see how much one needs to invest to achieve synthetic DRIP.
Note that this exercise is merely meant to be a resource that I am sharing and a company at either end of the scale may or may not be the best investment. Investors are recommended to perform due diligence before investing in any of the companies.
Before I list the companies and present the data, an introduction to the terminology is in order
- DRIP (Dividend Reinvestment Plan) – Usually the term applies when a company runs an plan directly where investors, instead of receiving cash payouts from the company, receive partial (or full) shares in the said company. DRIPs are favored by dividend investors as the investment compounds over time by getting those dividends reinvested regularly.
- Full DRIP – A full DRIP refers to a program where partial shares are allowed to be held. For e.g., if an investor owns 100 shares of a company and the dividend amounts to 0.75 a share based on market value, after the transaction is completed, the investor will own 100.75 shares.
- Synthetic DRIP – A synthetic DRIP is common amongst discount brokers. When dividend amounts from the holding exceed atleast 1 share price of a company, investors can participate in the DRIP program to reinvest. Any partial amounts are paid out in cash. For e.g., if an investor own 100 shares of a company, and the dividend amounts to a total of 1.25 shares, post transaction, the investor will own 101 shares + cash amount of 0.25 shares.
So, with that terminology out of the way, here are the details.
The following spreadsheet details the Canadian Dividend All-Stars sorted by the amount of investment needed to DRIP in increasing order.
Caveat: Due to the unique way, Google and Yahoo Finance works, there were some quirks with getting the annual dividend values live, and even when I do so, the data is unreliable. For that reason, I have decided to hardcode the annual dividend column instead. So, the dividend amount data (column E) is accurate at the time of publishing.
Some companies, even though Canadian and trading on Canadian exchanges, declare their financials and their dividends in US$. Those companies are highlighted in a different colored cell and have the dividend amount converted to CAD$ based on current exchange rate.
For a full window view of the spreadsheet, click here.
Save a Copy:
If you want to save a copy and/or change the view to sort differnt column, you can open the the spreadsheet here. Click on File > Make a copy. Note that you will need a Google account and this will save it to your Google Drive.
What are your thoughts on investing based on the ability to DRIP? I personally do not pay much attention to the DRIP amounts and am happy to collect the cash regularly. The cash collected, combined with new contributions get invested after reaching a certain threshold. Do you pay attention to the DRIP amounts? Share you thoughts below.
Full Disclosure: My full list of holdings is available here.