Some companies will reinvest your dividends into new shares at a discount to their stock market price. It’s called a Dividend Reinvestment Plan (DRIP). That is, you can buy a dollar’s worth of stock for less than a dollar.
DRIPs are offered by a company to shareholders that allows them to automatically reinvest their cash dividends in additional shares of the company on the dividend payment date. Many companies offer shares at a discount through their DRIP from one-to-10 per cent off the current share price.
Canadian Key stocks offering DRIP discounts are Agnico-Eagle Mines (5%), Bank of Montreal (2%), Canadian Utilities (2%) and many more. Of which, a full list can be found in issues of our sister publication Investor’s Digest of Canada.
Companies that offer both discounted prices and cash option plans are appealing. We outline a dozen advantages that you can get from dividend reinvestment plans, or DRIPs, and cash option plans. So while enrolling in DRIPs involves a bit of paperwork, it’s a fine use of your time.
These companies can help you profit from precious metals mining, banking, utilities, pipelines and telecommunications. Except for mining, these are defensive sectors. They generate dependable earnings and dividends.
In telecommunications, for instance, you might favour Telus over Key stocks BCE Inc., Quebecor Inc. and Rogers Communications. But we no longer favour TC Energy. In fact, we’ve now downgraded it to a hold. That’s largely because its Coastal GasLink is expected to cost a lot more money than initially expected.
The DRIPs list at Investor’s Digest of Canada includes detailed updates on these highlighted businesses, as well as many others.
This is an edited version of an article that was originally published for subscribers in the December 16, 2022 issue of The Investment Reporter. You can profit from the award-winning advice subscribers receive regularly in The Investment Reporter.
The Investment Reporter, MPL Communications Inc.
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