OK, so my rant yesterday might have been a little confusing, so I figured I’d run through the entire scenario with a stock that I own, but not the actual shares held numbers for me (I am paranoid about my secrecy sometimes, I know).
Let’s take Sun Life Financial (stock ticker symbol SLF on the Toronto Exchange)
It’s current price is $52.41 per share Canadian . The reason I bought it was for dividends, and because I actually deal with them on a few things with my job, and figured they seemed to know how to make money (this is not an endorsement on my part, simply an explanation as to why I own shares in them).
First thing to find out is whether Sun Life offers a Dividend Reinvestment Program, and yes they do, so that is a check on the list.
What was the last dividend they paid? They paid $0.32 per common share, from their latest financial statement.
How many shares do I need to own to get a share in the DRIP program?
I trust the arithmetic is straight forward here. So if I own less than 164 shares of SLF they would simply credit my trading account the amount of the dividend (number of shares * 32 cents) and that would be it. If I owned 165 shares however, I would get 1 extra share of SLF in my account and some amount less than a dollar as the amount left over from the dividend.
Remember these dividends are quarterly paid as well, so if I owned the right amount of shares I might get new share certificates in my account 4 times a year. Not too shabby, I think.
This is one way to invest, it is not the only way, and for me it is one of the few ways I understand, so I stick with this for now.