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High dividend stock plays
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High dividend stock plays

  #21 (permalink)
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Be aware of the after tax returns when considering dividends from Canadian stocks. The dividend tax credit takes into consideration the taxes already paid on the dividends you receive.

I not sure but I think US dividends are subject to a withholding tax in a TFSA.

I use the ETF SDOG in my RRSP.

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  #22 (permalink)
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deaddog View Post
Be aware of the after tax returns when considering dividends from Canadian stocks. The dividend tax credit takes into consideration the taxes already paid on the dividends you receive.

I not sure but I think US dividends are subject to a withholding tax in a TFSA.

I use the ETF SDOG in my RRSP.

that is why you shouldn't mix US stocks into a TFSA or RRSP if you are a Canadian investor. I have a separate US Dollar stock portfolio for any American stocks I purchase and I do not invest in US dividend stocks for that reason.

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  #23 (permalink)
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I have a lot of questions as to the accuracy of the "Reinvestment calculations" of that website.

I discuss this in some detail in my journal in post #220

https://futures.io/trading-journals/30636-underexposed-canadian-stock-journal-22.html

However in summary consider a graphic of three calculations

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Does it make sense to you that a $100,000 investment should have the same % gain as a $1000 investment when the dividends are reinvested?

$1,000 of JPM stock in an entire year does not generate enough accumulated dividends to buy a single JPM stock

$100,000 of JPM stock generates enough money in dividends for about 14 new shares of JPM each quarter...when in turn would generate more dividends each succeeding quarter

So the investment yield after one year for $100,000 should NOT be a simple 100x multiple of an investment of $1,000 of the same stock.

Doesn't that make sense??? Seems obvious to me.

So far they claim their calculations are correct...without revealing their calculation algorithm.

AM I missing something here????

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  #24 (permalink)
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Doesn't that make sense??? Seems obvious to me.

So far they claim their calculations are correct...without revealing their calculation algorithm.

AM I missing something here????

If you sign up with the Company for the DRIP you will receive partial share and be paid dividends on part shares. There is usually an initial fee in the 50 dollar range to register but it depends on the Company.

When I started investing years ago I had DRIPs with several US companies that also allowed you to buy additional shares without brokerage fees.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #25 (permalink)
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that is why you shouldn't mix US stocks into a TFSA or RRSP if you are a Canadian investor. I have a separate US Dollar stock portfolio for any American stocks I purchase and I do not invest in US dividend stocks for that reason.

There is no withholding tax in a RRSP because of the tax treaty. However the DRIP program only buys whole shares.

TFSA isn't treated the same. I have US stocks in the TFSA but only for Capital Gains.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #26 (permalink)
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deaddog View Post
If you sign up with the Company for the DRIP you will receive partial share and be paid dividends on part shares. There is usually an initial fee in the 50 dollar range to register but it depends on the Company.

When I started investing years ago I had DRIPs with several US companies that also allowed you to buy additional shares without brokerage fees.

that might happen in the USA but not in Canada.

My experience with DRIPS is

1. On dividend payout day, I was given the dividend in cash
2. at some time in the future (usually 3-7 business days) I would get the shares in that company to a highest whole number deposited into my account with the cost of those shares subtracted from the cash-on-hand.

eg. If the total dividend on a company with a share price of $10 was $110.00, I would be credited with the $110.00 first....then I would be given 10 shares @ $10 each and $100 would be subtracted from my account for these shares.

there were no commissions paid and sometimes I got a bonus 1 or 2 percent off the normal share price...so in this case I would gain 10 new shares Plus the residual $10 from the dividends of $110.00

I find it interesting as to how difficult sometimes that the US market is compared to the Canadian market...especially when it comes to taxes.

Who in the heck is going to purchase a partial share when you want to sell...to the partials add up from successive quarterly payments? A very needlessly complicated system IMHO

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  #27 (permalink)
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Did you have the shares registered with the company or with a broker?

It was years ago when I dripped. I believed I had CP, Northern Telicom(before it became Nortel) and a couple others. Partial shares were issued, and dividends were paid on partial shares. When you wanted to sell the company would redeem your shares. This was back in the 80s, Commisions were 3% with a minimum of $50 thru a broker so buying shares on a DRIP and being able to buy a set dollar amount each quarter made a lot of sense for an investor with limited funds to invest at that time.

I don't know if those option are available today.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #28 (permalink)
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deaddog View Post
Did you have the shares registered with the company or with a broker?

It was years ago when I dripped. I believed I had CP, Northern Telicom(before it became Nortel) and a couple others. Partial shares were issued, and dividends were paid on partial shares. When you wanted to sell the company would redeem your shares. This was back in the 80s, Commisions were 3% with a minimum of $50 thru a broker so buying shares on a DRIP and being able to buy a set dollar amount each quarter made a lot of sense for an investor with limited funds to invest at that time.

I don't know if those option are available today.

I described what happened...it may be a TD Waterhouse procedure...I cannot say what happened at other brokerages but...I received the complete dividend in cash...then in a few business days the shares appeared in my account...the price was AT MOST what the closing price on the day the dividends were issued and often at a 0.5 - 1.0 % discount...no partial shares issued the partial share value remained as cash.

So it was like you were issued the dividend for which you were taxed but you turned around and purchased shares in the company sometimes at a discount (depending on the company) and always commission free.

A rather simple method of performing the DRIP...the only thing that bothered me is that sometimes it took 3 days...others it took 10 days to actually get my shares....that delay bugged me...even though I had the money early enough....I always wondered if the shares would show up.

BUT THAT IS NOT THE ISSUE HERE....Does it make sense to you that an investment of $1,000 in JPM which generates not enough dividends in an entire year to buy ONE JPM share in reinvestment....have exactly 1/100th the final value of a $100,000 investment in the same stock receiving enough dividends every quarter to purchase about 14 stocks every quarter which produce even more dividends.

The $100,000 investment SHOULD produce more than 100x revenue at the end of the year compared to the $1,000 due to the additional shares generated....It seems obvious to me but that is not what their calculations show


Last edited by Underexposed; July 22nd, 2014 at 12:43 AM.
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  #29 (permalink)
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Quoting 

BUT THAT IS NOT THE ISSUE HERE....Does it make sense to you that an investment of $1,000 in JPM which generates not enough dividends in an entire year to buy ONE JPM share in reinvestment....have exactly 1/100th the final value of a $100,000 investment in the same stock receiving enough dividends every quarter to purchase about 14 stocks every quarter which produce even more dividends.

The $100,000 investment SHOULD produce more than 100x revenue at the end of the year compared to the $1,000 due to the additional shares generated....It seems obvious to me but that is not what their calculations show

Yes it makes sense it the shares are registered in your name and you hold them. Not registered in the brokers name and held in your account. You do the DRIP thru the company's stock transfer agent. That way you are able to receive partial shares and be paid dividends on partial shares.

In my experience shares were issued on the day the dividend was paid,usually at the closing price.

There is a fee to get the broker to issue the share certificates to you. $40 - $50 range. When you want to sell, the transfer agent will redeem the shares they hold and you will have to get the shares you hold to your broker. (that entails taking the share certificates to the brokers office or bank branch and signing them into your brokerage account). This process can take several days.

Some companies also allow you to contrbute additional cash each quarter. Some will sell shares at a discount.

You can also join the Canadianshareowners association and do the same thing with a basket of shares but I found DIY to be less expensive.

It is a great way to make the power of compounding work for you if you are a long term buy and hold investor.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #30 (permalink)
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I give up....You have a great talent for not responding to my ISSUE...forget it.

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