Bye Bye DRIP

Hello everyone hope you are all doing great. Last Thursday April 7th, 2016, I called RBC Direct Investing and informed them that I wanted to opt out of the the Dividend Reinvestment Plan (DRIP) for the stocks I currently own, and have them place the money in my cash account.

I have done this for a couple of reasons:

  1.  I have a low income, I am only able to invest about $2,500 per year ($1,250 into both my TFSA and RRSP accounts)
  2. This will allow me to make purchases quicker if I find a bargain.

Let’s take a look at 2015 for example I was able to invest $1,250 into each of my accounts, with RBC Direct Investing each trade costs me $9.95 to make, so I try not to trade often therefore I try to have a minimum $1,000 sitting in my cash to make a trade. So as you can see I was only really buying once or twice per year for each account (TFSA and RRSP) since not every company I own was I able to purchase a new share when receiving their dividend. In 2015 I received a total of $2,426.28 in dividends about half of that total went into my DRIP’s and I was able to purchase more shares of the companies the other half into cash so I was able to buy $3,713.14 of new stocks.

In 2016 I hope to increase my cash significantly. For my TFSA here is what I expect to happen:

  1.  Invest another $950 from now until the end of 2016.
  2.  Receive $734.49 in dividends from the companies I currently own.
  3.  Receive $1,015.04 from a stock sale.
  4.  Total cash for the remainder of 2016 is expected to be $2,699.53

For the above figures I invest bi-weekly every week I get paid I put $50 into each of my accounts. As for the $734.49 this is what I project to earn over the remainder of 2016. This number could go higher or lower due to dividend increases or decreases. In late April if the regulators give approval Long Run Exploration will be sold to Chinese investors and I expect to receive $1,015.04 from this sale.

For my RRSP here is what I expect to happen:

  1.  Invest another $950 from now until the end of 2016.
  2.  Receive $1,754.11 in dividends from companies I currently own.
  3.  Total cash for the remainder of 2016 expected to be $2,704.11.

For the dividends I am expected to receive for the rest of this year I used the 2015 figures. Also that number could increase or decrease due to exchange rate as I have a number of stocks that pay dividends in $USD. Also another factor will be dividend increases or decreases so far this year six of my stocks have announced increases so I expect my dividends to grow beyond the number I provided.

So by the end of the year if I receive what I expect to receive I will have a total of $5,403.64 combined from my TFSA and RRSP accounts, that is quite an improvement from the $3,713.14 I had last year.

Personally I like DRIP’s and some day I plan on opting back into them, but for now I feel I can put the cash to better use and grow my dividends further by choosing this new path. What do you guys think of my decision?? Do you have DRIP’s or have you opted out of them??? I would sure like to hear from you.

Thanks
Matthew

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4 thoughts on “Bye Bye DRIP

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