How to Buy Canadian Drips
Choosing to invest in the Canadian stock market can be a tricky thing. Stocks and bonds, mutual funds and DRIPS are just a few of the many investment options you may choose to pursue. Learning about Dividend ReInvestment Plans is important to help you make wise decisions regarding your investment portfolio.
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Choosing your Stocks
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Research the various stocks available for purchase in the Toronto Stock Exchange. Various stocks do not make money or dividends and do not have a DRIP program and, as a result, are not good investments. Check out stock reports and the daily TSE report to see which stocks are a good buy and ensure that the companies in which you are looking to invest are a qualifying DRIP company. Look for stocks that have steady or rising dividends. Stocks in the manufacturing, finance, utilities and resources are good ones to invest in long-term. If possible, develop a diversified portfolio that will ride the tide of the stock market.
Finding a Broker
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Find a stockbroker. In order for you to reinvest your shares, you first need to own shares. Look for a discount broker or for a broker online. Be sure to shop around as brokerage fees and registration fees vary. DRIP purchases can be made in odd lots or even fractions of shares for added incentive.
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Registration
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Register your stocks in your name. This can be done immediately upon the purchase through your broker or after the initial sale. A commission fee of $25 is usually applied for this service. Stocks may also be registered in your name by another shareholder transferring the title and shares over to you. Upon registering the stocks, you will be required to provide your name, address and Social Insurance Number.
Enrollment Forms
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Request enrollment forms from the company's trustee(s) for DRIP and Share Purchase Plans (SPPs). Fill out the forms with the required information to be immediately eligible to invest. Most companies will send the forms immediately upon share registration but in some cases it may be necessary to request the forms directly.
Investing
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Allot a set amount of money each quarter or month to re-invest. This ensures you will average the cost of shares and take the guesswork out of timing your investments. Every investment you make will be recorded and you will receive a regular statement outlining your progress.
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References
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