Many of these tips will no doubt apply to Computershare US and Australia, etc., too. I’ve been thinking about Computershare again lately as I try to get two more DRIPs up and running (if you don’t know about DRIPs, read about why I think you should be in them or how they’re perfect no matter what your age or investing experience is). One in particular has been going through strange administrative difficulties, mostly due to luck and timing, I think. In none of these cases do I blame Computershare for anything. They’ve almost always been very personable and pleasant enough to deal with if you’re organized and know what you’re talking about. I’ve dealt with Computershare for nine years now and I think I’ve only had one frustrating customer service conversation. Others’ experiences differ, of course, and everyone has their own level of tolerance for different things.

So this is what I’ve learned from the last few bumps in the road:

(1) Always keep a record of your certificate number and the date the certificate was issued (which is not always quite the date you paid for it or ordered it; you’ll have to check your brokerage records and/or the certificate itself). You’ll need these especially as security verifications of your account for those times when you need to get in touch with Computershare about something but your account hasn’t been set up yet because it’s too new and you do not yet have a holder account number. So write these important numbers down AS SOON AS you receive your certificate.

(2) Make sure that you always register each certificate and/or each new account in the exact same name and address, so that you can access them altogether under one online account. If your name is John B. Herrington, make sure you always register new certificates and accounts using that middle initial, otherwise you’ll end up with one online account showing all the shares you registered under “John Herrington,” and another online account for everything you registered under “John B. Herrington.” This may not sound like a big deal, but it is after the fact if you later decide you want to put everything under the same name. You’ll end up having to re-register shares by transferring them to yourself in a process that could take weeks. As an example, I’ve recently been through this process myself, and I am still trying to get a DRIP running for a share that I bought back in April 2008. These comments apply to your address too. If you live on Bonds Street, make sure that you always register things using the same consistent spelling. You might not think it would matter and that everyone would know that “St.” means the same thing as “Street,” but I’ve had accounts go unregistered and share transfers not take place on time because my address “did not match” for this very reason!

(3) If for some reason you need to place a stop payment on a cheque that you had sent in for an optional cash payment, make sure that you also call in and tell Computershare about it before they cash it. This point might apply to using stop payments with all kinds of companies, but this was the first time I’d needed to use a stop payment and was surprised to be charged an extra $25.00 by Computershare because they didn’t know a stop order had been placed and they went ahead and tried to cash the OCP cheque. And I’d already paid $12.50 at my bank in order to place the stop payment in the first place! So this point brings up another one:

(4) Just an extremely simple good budgeting and records tip, here (students pay extra attention!): keep very close track of what cheques you have coming out of your account as well as all other debits that might be coming out. I tend to run my chequing account down to the wire, that is, I don’t leave any cash in there “floating.” All cash goes immediately to bills, expenditures or investments. But this runs me into danger when sometimes I have too many cheques at crosshairs and end up with not enough money in there to cover something. Don’t forget about end-of-month bank fees that might not be withdrawn until 11:59pm or even early morning the next month. For all of these reasons, it might be a better idea to just leave a float of $100 or whatever size cushion in your account just in case. Some people will use overdraft for this purpose, but overdraft often costs you money as well.

(5) If you think you might want overdraft protection on your account, get it while it’s offered (or available) to you. My bank has offered it to me on the phone several times before (you know, at the end of the call when you’re really put off by extra sales gimmicks) but I always turned it down. Then when I really needed it and applied for it, the bank refused me. Needless to say I was overdrawn and had to pay hefty fees around $40.00.

(6) Finally, if you call into Computershare and talk with someone and you receive confusing or less than satisfactory service for whatever subjective reason, (a) don’t take it out on the representative; this will cause angst and that representative might just keep passing that angst on throughout the rest of the day and to other callers (people just like you); b) just call back and you’ll probably get a different agent on the line. This agent might know more or have more experience than the other one and will have a different answer to your question. While this is a simple tip, it helps to keep it in mind. Remember, these are your investments you’re dealing with. You want to treat the people that help you with them with royal gloves (in all reasonableness, of course. If an agent is truly abusive or brunt, it might help to tell someone else about it, but do so in a diplomatic, non-hostile manner). Let’s remember that Computershare provides an excellent service and ultimately I think you want to be thankful about that. At least in Canada, anyways, there are less options for DRIPs than there are in the States, and we don’t want to take it for granted. This is the way I feel about it, anyway.

What about you? Do you have other tips for dealing with Computershare that I’ve left out here? Anything else to tell new “DRIPPERs” about? Leave a comment (or questions!) below or send me an email. Also, don’t forget to subscribe to the free feed to receive future posts.

This ranking is somewhat arbitrary insofar as it is based upon my own opinions and preferences as a long-time DRIP investor, but I am basing it on certain objective and easily obtainable criteria, such as:

(1) whether the plan offers a discount on reinvestment,
(2) whether it requires a minimum amount for making an optional cash purchase (and how much it is),
(3) how often it invests (more frequently is better),
(4) how often it increases its dividend,
(5) the current dividend yield,
(6) how often the stock tends to split and
(7) which Transfer Agent is used (I find Computershare easier to deal with; more user-friendly statements)

I’m also only going to evaluate Canadian corporations. I have purposefully omitted the many income trusts and income funds that have DRIPs because by 2011 some of them may have converted back into a corporate structure and may no longer offer DRIPs. In the past few months, some of these trusts have already suspended their dividend reinvestment plans. So based on these major criteria, here’s my ranking for the best DRIPs for the long-term, buy-and-hold DRIP investor. The links I have included direct you to the relevant Investor Relations pages. If the links change over time, you can go back to the company’s home page and find their IR centre from there.

Best Canadian DRIP Investments

1. Bank of Montreal (monthly, Computershare, frequent increase, no minimum, splits)
2. Bank of Nova Scotia (monthly, Computershare, frequent increase, splits)
3. TransCanada (discount, Computershare, frequent increase)
4. CIBC (monthly, frequent increase, yield)
5. Enbridge (discount, frequent increase)
6. Telus (Computershare, frequent increase, growth)
7. BellAliant (monthly, no minimum)
8. Suncor (Computershare, splits, growth)
9. TransAlta (growth)
10. Canadian General Investments (Computershare, diversified)

Two other factors not taken into account here that you might want to consider also are (1) how quickly the company cashes your cheque (I find this convenient - sometimes you can wait 2 months or more before they take it; the alternative is to figure out when they cash it exactly so you can send it just beforehand. But your timing has to be very good.) and (2) the ratio of share price to yield: so you can see how quickly your money can grow through reinvestment. A stock price of $100 and only a 1% yield will take much longer to snowball than a stock price of $40 and a 5% yield. And obviously, of course, you want to think about the company itself and if that’s a company you want to invest in at all. I did not include Pulse Data, for example, because I am not convinced yet that it is an investment for me. It does, however, have a DRIP plan you can check out.

Why the above criteria? Over time they have been what makes any DRIP plan great, in my opinion. This can include simply being more convenient, but factors like the discounts on reinvested amounts can help with growth. If you have a stock that (1) splits regularly, (2) offers a discount on reinvestments, (3) increases its dividend yearly (or more), and (4) enjoys overall earnings growth, you have an excellent DRIP stock and you’ll get really excited about it. That’s why I’d have to say Bank of Montreal is one of the most exciting DRIPs. But you may have other favourites. If you’re already invested in some of these DRIPs, what do you think of this ranking?

Another factor to include in a future rankings list would be which of these companies’ plans is open to foreign investors. In a future post (perhaps with the help of a friend south of the border), I’ll include a ranking of some of the best US DRIPs. This will be much harder to evaluate since there are so many of them. Feel free to send me in your favourites.

In a previous post, I discussed the benefit of investing in stocks directly using dividend reinvestment plans (also known as direct purchase plans, direct reinvestment plans, or direct stock purchase plans - there are some slight pragmatic differences here, but nothing that should prevent you from getting started and enrolling). In this post I would like to go into more detail on a specific method of direct investing. This involves buying stocks directly using MoneyPaper.

MoneyPaper is the name of an online and print magazine that publishes directories of direct investment plans listed on American stock exchanges. It also includes Canadian and other foreign stocks (eg., Toyota, Nestle, BP) in their ADR (American Depository Receipt) form on the NYSE and NASDAQ. Online, MoneyPaper is located at http://www.directinvesting.com.

The MoneyPaper guide is more than just a directory. It also discusses the larger picture of “how to build wealth DRIP by DRIP” by investing without a broker. It explains what DRIPs are, how to create a diversified DRIP portfolio, and how to enrol in DRIPs using the Temper Enrolment Service.

Temper of the Times Investor Services is a broker that specializes in doing DRIP enrolments and is affiliated with MoneyPaper for helping MoneyPaper subscribers get started with their first dividend reinvestment program. It’s only $50 (a one-time charge) for enrolling in a plan through MoneyPaper, and you get half-off ($25) if you’re already a MoneyPaper subscriber. For this reason it’s probably the easiest way to get started investing in securities.

Stocks You Can Buy Commission-Free (No Broker)

The guide lists almost 1,000 different companies and the types of direct stock purchase and reinvestment plans they offer. Some of the more well-known US companies that offer DRIPs include Costco (COST: NSDQ), Domino’s Pizza (DPZ: NYSE), Equifax (EFX: NYSE), Fannie Mae (FNM: NYSE), Home Depot (HD: NYSE), JP Morgan Chase (JPM: NYSE), Mattel (MAT: NYSE), Proctor & Gamble (PG: NYSE) and Texas Instruments (TXN: NYSE). There is quite a selection. With this amount of companies that you can buy directly into, who needs to invest with a broker?

What’s even more amazing, from my own perspective, is that you can even DRIP quite a few foreign companies listed in New York under their ADRs. This is probably the best way to invest foreign, as well. You don’t have to worry about trying to figure out how to buy Chinese companies on the Shanghai or Hong Kong exchanges. Here’s a list of some that already allow DRIPs:

China Eastern Airlines Corp. (CEA: NYSE) -
China Mobile (CHL: NYSE) -
China Southern Airlines (ZNH: NYSE) -
China Telecom Corp. (CHA: NYSE) -
China Unicom (CHU: NYSE) -
Guangshen Railway Co. Ltd. (GSH: NYSE) -

Not all of these companies are 100% fee-free. China Eastern Airlines’ plan, for example, charges $5 (+10 cents/share) for each optional cash purchase. Home Depot’s plan charges 5% on reinvestments of the amount of dividends reinvested (but only up to a maximum of $2.50). Even still, these fees are cheaper than many brokers. And as I explained in my last post, many plans have absolutely no fees at all. These are the ones you want to look out for first. Lehman Brothers Holdings Inc. (LEH: NYSE), for example, pays all fees for reinvestment, certificates and optional cash purchases (although there is a $10 fee to sell if you ever decide to withdraw from the DRIP). These figures are all based on the 18th edition of MoneyPaper’s Guide (pictured above). You should always check the websites of the companies in question (as well as their Transfer Agents) for the most up-to-date figures and information. Some of them do change.