Dividend Reinvestment Poll

[JHZR2]

Hello,

can you tall me if your broker allows dividend reinvestment on all stocks in your portfolio, and if they offer fractional hare reinvestment?

I am not sure that I want to do DRIPs, as you then have to have accounts with about five different banks to cover diversified offerings from major companies.

I am currently an ameritrade member, and while they have good rates and Ive ben happy with them, the only company that they have ever told me they do reinvestment for is MOT, and you have to own enough shares to buy one full share to do it.

My active trading account isnt big enough to have a few diversified holdings and enough shares of them to do full-share purchases when dividends are paid... So I might change if there is a decent broker that does this.

I know sharebuilder gives fractional share reinvestment, but their fees arent all that good all things considered.

Any info would be great. Thanks!

JMH

 

[Pablo]

You know I would love it for ETF's!!!!

 

[JHZR2]

you have to do a lot of trading to be able to use that... else you pay an inactivity fee, or at least that was my impression.

Seems like a decent deal if youre trading or adding money all the time.

Thanks!

JMH

 

[pitzel]

The 'minimum commission' at IB is $10/month. So if you only use $5 in commissions, they bill you another $5.

Compared to a mutual fund MER, or even compared to a dozen trades a year at AMTD or their competitors, this is very competitive.

IB offers direct access to pretty much every stock exchange in the world, all of the major futures exchanges, and pretty much every exchange-traded product imaginable is available.

Since I'm Canadian, the multi-currency support absolutely rules. And their margin rates are very inexpensive compared to the competition.

 

[IslaVistaMan]

Charles Schwab will do fractional share dividend re-investment.

 

[Pablo]

IV Man - no charge for stocks?

Fidelity will do it for mutual funds. Even for other company funds.

 

[JHZR2]

OK, part II:

does your broker pay interest for petty cash sitting in your account?

Thanks!

JMH

 

[Pablo]

Of course. Usually within the top 10 MM accounts in the US. Right now it's 4.8% or so.

 

[Slick 55]

One thing to watch for is if your broker will provide cost basis information. DRIP can make this a nightmare.

 

[JHZR2]

quote:

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Originally posted by Pablo:
Of course. Usually within the top 10 MM accounts in the US. Right now it's 4.8% or so.

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For the top dollar holders maybe, right???

For people who arent sitting on large cash positions... people who are sitting on
Its hard to find the rates at the major brokerages. I know ameritrade has a tiered system, and it is much lower than 4.8% even at the top.

JMH

 

[pitzel]

I use Interactive Brokers (http://www.interactivebrokers.com). They charge a $1 commission to buy or sell any US stock ($2 for Canadian stocks).

They don't offer dividend re-investment, but for $1 a trade, it is trivially inexpensive to re-invest dividends or to invest new amounts.

Plus I get to choose where I am going to re-invest the money. It might not make sense, for instance, to re-invest into a very hot stock, when the best returns are available from an undervalued stock, or by reducing my margin balance.