Some investors really like dividend reinvestment plans. They allow your dividends to be used to purchase more shares and with no broker fee. And sometimes you even get a discount of around 2% or even 5%!
I can definitely see the attraction when there is a discount. But I was never attracted to the idea if there was no discount. I’d rather let my dividends accumulate and then I choose where to reinvest them. And with $10 or less fees to trade, the opportunity to avoid a $10 fee but giving up the ability to pick and choose where I reinvest is not attractive to me.
Also, most of my investing has been in RRSP accounts along with some in RESP and TFSA. And as far as I know, you can’t register your shares in your own name and join DRIP programs and, importantly, get any discounts when your shares are in those registered RRSP, RESP and TFSA plans. In those accounts, yes you CAN sign up with your broker for what appears to be a DRIP and they will buy shares for you with your dividends and with no fee. But I am almost certain that these “synthetic” DRIPs do not include the ability to get the discounts that actual DRIPs sometimes offer. It is only the DRIPs with discounts that I would ever be interested in.
And even in taxable accounts, it seems to me that there may be some disadvantages of registering your shares with the company. Possibly that makes it more complicated to sell the shares later?
If any subscriber has a lot of experience and knowledge about DRIPs and wants to share information, I would be happy to post your guest article here about it. Or if someone wants to suggest some good web sites about DRIPs I will add that to the links page here.