Investing

Bought dividend stocks during the lows, but now I can't drip. Do I top up each one at all time highs?

  • Last Updated:
  • Apr 10th, 2021 10:49 am
[OP]
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Sep 27, 2009
747 posts
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Sask, Canada

Bought dividend stocks during the lows, but now I can't drip. Do I top up each one at all time highs?

So I bought mostly bank stocks back when they were really cheap and enough of each to drip. Of course totally forgetting they would probably rise back up and now my dividend payout can't buy any shares. I own TD (48 Shares), RBC (shares), BNS (55 Shares) and BMO (56 Shares). I'm 35 and don't plan on selling them. Do I just bite the bullet and top each one up so they will all drip?

Most of my money is in XEQT so I could sell some of that to make it happen. I will be adding around $1500 a month for the next four months to my tfsa account which I can slowly add shares as well. Or do I just buy XEQT and maybe one day they'll dip down when I can stock up.
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First things first, what exactly are you trying to achieve by DRIPing? Second, why did you spread your money among so many banks? Third, what brokerage are you using?

The concept of DRIPing is nice knowing that your money is going toward more shares of a company. What I'm concerned about is you are letting an investment option decide how you invest rather than the appropriateness of the investment to your goals. Owning XEQT means you already have decent exposure to the banks. Nothing wrong with buying more or getting more exposure mind you, but you are just doubling down on many names, and not being selective. With the amount of money you are also committing shows you don't have much to work with. Whether you should buy more should be based on the amount of exposure you get, not whether you will have enough to DRIP. What happens if shares balloon higher and you can't get a single share again? What happens if you do buy, only for them to split shares? RY and CM could easily split considering they are over $100 at the moment.

Generally I would recommend owning 100 shares each or around $5k per individual stock as a good starting point, although Perhaps you could have considered opening a Wealthsimple Trade account to hold just your bank stocks to make this work and not worry about commission. That way you can accumulate some dividends to buy more shares. Or consider a bank ETF like ZEB, CIC or even one like HCA or HCAL.

When buying individual stocks, try to be more strategic or selective. Buying them all is pretty much an expensive way to replicate an index ETF.
Last edited by xgbsSS on Apr 6th, 2021 10:37 am, edited 2 times in total.
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OP, apart from reasons why you should or should not DRIP, I don't understand why you say you cannot do it. You can call the brokerage and ask them to set up DRIP for the individual holdings or at the account level. It is that simple.
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will888 wrote: OP, apart from reasons why you should or should not DRIP, I don't understand why you say you cannot do it. You can call the brokerage and ask them to set up DRIP for the individual holdings or at the account level. It is that simple.
I think the dividend he is getting is not enough to drip 1 share.
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zzricezz wrote: I think the dividend he is getting is not enough to drip 1 share.
Oh, you are right. It would take more than one quarter of dividends to pay for one share. Honestly what difference does it make if one share is added or not.
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[OP]
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Sep 27, 2009
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Sask, Canada
xgbsSS wrote: First things first, what exactly are you trying to achieve by DRIPing? Two, why did you spread your money among so many banks? Third, what brokerage are you using?

The concept of DRIPing is nice knowing that your money is going toward more shares of a company. What I'm concerned about is you are letting an investment option decide how you invest rather than the appropriateness of the investment to your goals. Owning XEQT means you already have decent exposure to the banks. Nothing wrong with buying more or getting more exposure mind you, but you are just doubling down on many names, and not being selective. With the amount of money you are also committing shows you don't have much to work with. Whether you should buy more should be based on the amount of exposure you get, not whether you will have enough to DRIP. What happens if shares balloon higher and you can get a single share again? What happens if you do buy, only for them to split shares? RY and CM could easily split considering they are over $100 at the moment.

Generally I would recommend owning 100 shares each or around $5k per individual stock as a good starting point, although Perhaps you could have considered opening a Wealthsimple Trade account to hold just your bank stocks to make this work and not worry about commission. That way you can accumulate some dividends to buy more shares. Or consider a bank ETF like ZEB, CIC or even one like HCA or HCAL.

When buying individual stocks, try to be more strategic or selective. Buying them all is pretty much an expensive way to replicate an index ETF.
Using questrade

So in terms of workable money me and my spouse have over 100k in our tfsa in investments. We don't have it maxed yet but hopefully within the next year. Most of my funds are in etf's but while learning I thought bank shares were a safer bet. I understand I could buy zeb but I know it's cheaper to just buy the bank stocks themselves. One of the few times I'd rather not go with an etf. Thanks for the advice on being more selective, I should have focused on just maybe two banks.

I've currently just been buying xeqt with the dividend payouts. I like the idea of drip until I would start using the dividend to live off of which is a long ways away. I know there are many debates about drips, dividend stocks, and growth stocks.
[OP]
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will888 wrote: Oh, you are right. It would take more than one quarter of dividends to pay for one share. Honestly what difference does it make if one share is added or not.
So I shouldn't worry about it and just put the dividend towards whatever?
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Paxonator wrote: Using questrade

So in terms of workable money me and my spouse have over 100k in our tfsa in investments. We don't have it maxed yet but hopefully within the next year. Most of my funds are in etf's but while learning I thought bank shares were a safer bet. I understand I could buy zeb but I know it's cheaper to just buy the bank stocks themselves. One of the few times I'd rather not go with an etf. Thanks for the advice on being more selective, I should have focused on just maybe two banks.

I've currently just been buying xeqt with the dividend payouts. I like the idea of drip until I would start using the dividend to live off of which is a long ways away. I know there are many debates about drips, dividend stocks, and growth stocks.
It's not cheaper if you end up buying small amounts and paying commissions like you have been doing. You would face that $4.95 commission with ECN fees due to the odd-number of shares. Additionally, while learning is a perfectly reasonable way to go about this, why did you buy so many different banks? It only thins out your investment further without giving you actual clout.

For learning purposes, max 1 stock at a time. There's really no point buying two or more stocks in the same industry with the amount of money you are dedicating. The focus should not be on the DRIP itself, rather whether it is a wise and appropriate investment for your situation. If you do want to do this with a TFSA and you also own XEQT, there really isn't a reason to DRIP. Just buy more XEQT for now until you add more to your investment. Get comfortable with selecting stock. When you mix strategies in the same account, you need to be careful not to complicate for the sake of complicating. What I mean in this case is you are barely buying enough stock for you to effectively start a dividend-growth strategy, so unless you are buying regularly more shares, it probably means you need to dedicate more cash toward it, or perhaps cash out more XEQT to make it work.

For better learning, open a practice account somewhere and buy different banks. Try to see with simulation how the investments perform and with DRIPs. This will get you another way to practice without dedicating so much capital to do so.

Or as suggested, open a TFSA with Wealthsimple Trade and dedicate your cash for dividend stocks here. That way you have a degree of separation on strategy and you aren't faced with the commission issue.
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Paxonator wrote:
So I shouldn't worry about it and just put the dividend towards whatever?
At this point probably unless you dedicate more cash toward your bank holdings. You could buy XEQT as it comes in. Or perhaps use the dividends to buy one of the bank etfs I listed. That way you are dedicating the cash more or less to what you wanted invested.

You could sell some of the holdings but that costs more money. Add more cash when you can to make it worthwhile.

There is many options you can do. Ultimately just dont base your decision on whether you can DRIP or not
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Paxonator wrote: So I shouldn't worry about it and just put the dividend towards whatever?
Don't lose any sleep over it. You over diversified for the small amount of capital that was invested. If the banks were that risky requiring such diversification, then it would not have been a very wise investment to begin with. Save up and add to the positions until you at least have 100 or more shares so that it becomes a meaningful investment.
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xgbsSS wrote: At this point probably unless you dedicate more cash toward your bank holdings. You could buy XEQT as it comes in. Or perhaps use the dividends to buy one of the bank etfs I listed. That way you are dedicating the cash more or less to what you wanted invested.

You could sell some of the holdings but that costs more money. Add more cash when you can to make it worthwhile.

There is many options you can do. Ultimately just dont base your decision on whether you can DRIP or not
In terms of the MER for the XEQT, I see it's MER 0.20% on the BlackRock website. It hold 4 other ETFs inside this one ETF. So are you basically paying 5 MER fees ( 1 for XEQT and 4 for the 4 ETFs held inside XEQT)? If that's the case, is it better to just buy the 4 ETFs individually?
Last edited by RCML27 on Apr 6th, 2021 5:52 am, edited 1 time in total.
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RCML27 wrote: In terms of the MER for the XEQT, I see it's MER 2.00% on the BlackRock website. It hold 4 other ETFs inside this one ETF. So are you basically paying 5 MER fees ( 1 for XEQT and 4 for the 4 ETFs held inside XEQT)? If that's the case, is it better to just buy the 4 ETFs individually?
I don't think so. The MER for XEQT on Blackrock's website is listed at 0.20%

https://www.blackrock.com/ca/investors/ ... rough=true

In regards to the OP, I think it's commendable that he's using an ETF for global diversification.

If he's looking for individual Canadian high yield + dividend growth equities for a long term buy and hold, I'd be inclined over the years to slowly add some other sectors to the portfolio like, telecoms and electric utilities. Just build it slowly, one company at a time, at least that's what I did.
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Stryker wrote: I don't think so. The MER for XEQT on Blackrock's website is listed at 0.20%

https://www.blackrock.com/ca/investors/ ... rough=true

In regards to the OP, I think it's commendable that he's using an ETF for global diversification.

If he's looking for individual Canadian high yield + dividend growth equities for a long term buy and hold, I'd be inclined over the years to slowly add some other sectors to the portfolio like, telecoms and electric utilities. Just build it slowly, one company at a time, at least that's what I did.
Oops. My bad. I'll fix the MER to 0.20%. But those 4 ETFs inside the XEQT, isn't the MER fees for those being taken off each individual ETF too?
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RCML27 wrote: Oops. My bad. I'll fix the MER to 0.20%. But those 4 ETFs inside the XEQT, isn't the MER fees for those being taken off each individual ETF too?
No. Regulations in Canada makes it such that the MER that is posted must represent all fees including fees in the underlying funds invested.

Old article, but still relevent
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Paxonator wrote: So I bought mostly bank stocks back when they were really cheap and enough of each to drip. Of course totally forgetting they would probably rise back up and now my dividend payout can't buy any shares. I own TD (48 Shares), RBC (shares), BNS (55 Shares) and BMO (56 Shares). I'm 35 and don't plan on selling them. Do I just bite the bullet and top each one up so they will all drip?

Most of my money is in XEQT so I could sell some of that to make it happen. I will be adding around $1500 a month for the next four months to my tfsa account which I can slowly add shares as well. Or do I just buy XEQT and maybe one day they'll dip down when I can stock up.
I did the same thing as you and experienced same frustration with the drip not being enough to cover rising costs of the bank stocks. Cheap then, but now expensive. I asked here on RFD and got some good advice.
Give up the drip
Open account at wealth simple and just collect bank assets there...if you're just collecting there is no charge to purchase the shares and you can save up the dividends to buy them when theres money.
Or... buy HCAL which adds some leverage
shorting-canadian-banks-1920679/93/#p34118440
which is ETF that has only bank shares and runs around 20 dollars a purchase..
u can then leverage smaller amounts to hold more expensive shares... kind of like fractional shares they offer in Schwab in states and buying these smaller 20.00 units costs less per unit but still gets you that mix of bank shares you're looking for
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Paxonator wrote: Using questrade

So in terms of workable money me and my spouse have over 100k in our tfsa in investments. We don't have it maxed yet but hopefully within the next year. Most of my funds are in etf's but while learning I thought bank shares were a safer bet. I understand I could buy zeb but I know it's cheaper to just buy the bank stocks themselves. One of the few times I'd rather not go with an etf. Thanks for the advice on being more selective, I should have focused on just maybe two banks.

I've currently just been buying xeqt with the dividend payouts. I like the idea of drip until I would start using the dividend to live off of which is a long ways away. I know there are many debates about drips, dividend stocks, and growth stocks.

A final option (just for fun) is RBNK - etf which holds the 6 cdn major banks weighted by solactive Canadian bank index - I *think* thats by div yield.

- Currently at $23.30/share
- pays ~$0.07/mo/share
- free to buy on Questrade
- you’d need ~$7755 in shares to do a drip
- mer = 0.32%

You’d have to decide if the mer for just a few holdings is worth it to you but this would save you the effort of opening up an account at wealthsimple and would eventually become a nice little monthly income generator.

Good luck!
[OP]
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PaddyM77101 wrote: A final option (just for fun) is RBNK - etf which holds the 6 cdn major banks weighted by solactive Canadian bank index - I *think* thats by div yield.

- Currently at $23.30/share
- pays ~$0.07/mo/share
- free to buy on Questrade
- you’d need ~$7755 in shares to do a drip
- mer = 0.32%

You’d have to decide if the mer for just a few holdings is worth it to you but this would save you the effort of opening up an account at wealthsimple and would eventually become a nice little monthly income generator.

Good luck!
I actually already have a tfsa open at weathsimple when I was trying it out. Maybe it would be worthwhile to transfer things over to there. I still think it's cheaper in the long run to just buy the bank stocks instead of an etf. It's not really the effort I'm concerned about or paying the $20 to add to the four bank stocks I have. I'll probably end up just topping up each one eventually so I can drip them over the next for sure 20 years.
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PaddyM77101 wrote: A final option (just for fun) is RBNK - etf which holds the 6 cdn major banks weighted by solactive Canadian bank index - I *think* thats by div yield.

- Currently at $23.30/share
- pays ~$0.07/mo/share
- free to buy on Questrade
- you’d need ~$7755 in shares to do a drip
- mer = 0.32%

You’d have to decide if the mer for just a few holdings is worth it to you but this would save you the effort of opening up an account at wealthsimple and would eventually become a nice little monthly income generator.

Good luck!

good info
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Oct 31, 2014
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With all new money, just keep adding to XEQT... Done...

Enjoy the profits from the banks, you got in at a good time :-)

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