Dividend Reinvestment Program (DRIP) waiting time for credit | General financial discussion | Discussion forum

Hi Patch002,
I think it depends both on the stock that you are dripping and which brokerage you are using. I had a brokerage account with TD Bank and also CIBC. I drip National Bank dividends. At TD Bank, it took 5 days to receive the drip whereas at CIBC, it is next day. I called TD and asked why this was - they said it was because National Bank was issuing the dripped shares from their Treasury (?). I have now moved everything to CIBC. There is still the odd stock that takes up to 5 days to drip, usually a smaller company.

I suspect that the process is different between TD Bank and CIBC. Perhaps CIBC knows that they will eventually "receive" the dripped shares to pass onto their clients so they might credit them to a client's account before actually receiving them from larger companies. Just my uneducated guess.

Patch002 said
DRIP's waiting time for dividends are all over the map. e.g. When Inter-Pipeline (IPL) paid drip, the reinvested dividends were credited within a day. When BMO's monthly ETFs drips pay dividends, it could take 10 working days before the reinvested drip appears in your account. To me, the wait is unacceptable, I discussed the issue with a BMO rep. indicating that it takes T+2 to settle a stock transaction, why should the DRIP be T+10? BMO's Answer: It is their policy.

I'm curious, regarding bank stocks, how long is the waiting time for DRIP to credit your accounts? I had thought of DRIP for banks, but I'm not willing to wait 10 days for the credit to appear. Is this a BMO Investorline issue or overall DRIP issue?

Your thoughts?  

Not a bank stock, but my Alamos Gold dividend that was payable June 30th took 10 calendar days to show up in my TDDI account. Same thing happened with the payment before that. I haven't chosen to endure the holding time on the phone to ever ask why

AltaRed said
I have heard of various reasons for timing differences from stock to stock and also from broker to broker. I don't DRIP so don't care, but really, why should anyone care if it takes 2 days or 10 days to show in an account? As long as the price for the DRIP'd shares is correct.

I hear some of the same complaints about timing of cash dividends being credited to the account, but in the scheme of things what difference is a few days for the information actually show in one's account?  

I don't really care either, but I can see how it could be an issue if, for example, one wanted to liquidate an entire position and were still waiting for DRIP shares to be posted to your account. Waiting on the delay might result in less attractive exit pricing, or if you didn't wait, it might require you to execute a second trade to dispose of the laggard shares later. Just a hypothetical off the top of my head however

It could be internal policy, or just manual procedures. I've encountered times in the past where the wrong dividend payment amount was credited by Scotia iTRADE. It always seems to have been credited, though I don't match up the dividend payment amounts with the declared dividends of the companies so I may not really know. Nevertheless, there's a variety of reasons here, chiefly the T+1 settlement date, internal policies or procedures, technical reasons, DPP versus DRIP, and so forth.

I wouldn't worry about it too much. As long as you're leaving a sufficient cash cushion of at least a few hundred dollars in non-interest bearing brokerage cash, you should be fine.

Cheers,
Doug

Patch002 said
10 working days is 14 calendar days. A stock transaction takes T+2 days, a margin call provides 24 hours to resolve until forced selling. DRIPS are done electronically. My Tax return was assessed within a shorter timeframe. The query was, why should the DRIP take so long?
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The DRIP transactions are not ordinary transactions.

T+2 settlement applies to ordinary stock transactions done over a market, like the TSX. It doesn't necessarily apply to other transactions.

It can be weeks before I see, for example, the cash in lieu of the fractional share from a stock split or special share dividend. That's because the broker or transfer agent needs to gather everyone's fractional shares together, sell the resulting whole shares, get cash for the remaining fractional share from the company, and distributed the cash.

Londonguy mentioned Alamos Gold. When it decides to buy the shares off the market instead of issuing new ones from treasury for its DRIP, the company won't even start buying the shares until at least the business day after the dividend payment. This is from the Alamos Gold Inc. plan document:

5.6.1 For a Market Purchase, the Average Market Price will be the average price paid per Common Share on the open market by the Plan Agent. The Common Shares will be purchased on any day within the three (3) consecutive trading day period commencing one Business Day following the Dividend Payment Date.

Londonguy said
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I've read untold numbers of information circulars, proxy statements and financials in full detail, but I don't remember ever diving into the subsections of a DRIP document -- I salute you

It's not that unusual for those do-it-yourself investors who started before the synthetic whole-share-only plans were available from discount brokers.

With one plan, I remember the agent needs to receive the cheque and paperwork at least five business days before the investment date to buy shares in addition to the ones the upcoming dividend would buy.