Canadians Love DRIPs, Too 0 comments
Canadians Love DRIPs, Too
While opening a DRIP in the United States is relatively easy, Canadians face additional hurdles. First, though, we should distinguish between Canadian and American plans. While most U.S. DRIPs are open to foreign investors, the opposite is not true. Most Canadian DRIPs are closed to U.S. Residents. When Canadian citizens do get enrolled in U.S. Plans, they must invest in U.S. Dollars drawn on a bank with U.S. branches. In other words, their checks must bear standard 9-digit ABA routing numbers, so it's typical for a Canadian citizen to open a special bank account for investing in U.S. Dollars. But once they have such an account open, they can build a diverse portfolio of U.S. DRIPs.
Investing North of the Border
Traditionally, Canadian DRIPs have been concentrated in the half-dozen banks doing business in Canada and the wide array of Royalty Income Trusts operating in that country. Due to a change in the tax laws, though, many of those high-yielding trusts will lose their favored tax status, so many plan to convert to a standard corporate format. One additional hurdle that Canadians face is that there are no direct-enrollment plans in that country, so they need to own at least one share in their name in order to begin participating in a DRIP. Broker commissions (and certificate fees) can be extremely high north of the border, so there's a thriving community of Canadian DRIP enthusiasts who parlay the “buddy system” to transfer ownership on a regular basis. To find out more, check the message boards at this location:
http://dripinvesting.org/Boards/Boards.asp
(Note that that website is actually located in the United States, run by webmaster George L. Smyth of Maryland, but it has become an active venue for Canadian DRIPers.)
Disclosure: No positions
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