Canadian bank DRIPs are known for discounts of 2-3% on dividend reinvestment through their DRIP plans, but these discounts do fluctuate.
Starting with the November 2010 common dividend, the Bank of Montreal (TSX: BMO) will no longer provide a DRIP discount from the average market price on common shares purchased under the plan.
BMO has said there will be no future DRIP discounts at this time, at least until the Bank elects to otherwise reinstate the DRIP discount.
Of course, none of this applies to the average BMO shareholder – it only applies to shareholders of BMO under BMO’s DRIP plan. If you don’t know what a DRIP plan is or you’re confused about any aspect of it, I highly encourage you to read several of the articles I’ve got in the right sidebar on getting started in DRIPs and no-commission investing.
Other Banks with DRIP Discounts
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Royal Bank (TSX: RY) and Scotiabank (TSX: BNS) still provide discounts on their DRIPs as far as I am aware of.
During the recession, some of these discounts were likely put in place to help attract investors or keep them invested in the stock. Now that economic conditions have improved, especially for Canadian banks following Basel III, one could expect that there may be other revocations of DRIP discounts on bank dividends.
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