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I have seen a number of threads about DRIP investing, but I do need help with one concern.

I see from Nokia's and Intel's website that their DRIP programs are open only to American residents. Is this a general feature of US traded stocks? Is there any way for Canadian residents & citizens to take advantage of DRIPs in American companies?

Thanks very much,
pdwca
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pdwca,

Is there any way for Canadian residents & citizens to take advantage of DRIPs in American companies?

I'm not familiar with Nokia or Intel's drip program, but I'm a Canadian member of KO's (Coke) DRP. I completed my registration through Temper of the Times (www.moneypaper.com) and everything was started smoothly. You might want to try writing them, to see if they can help you.

Cheers!
Carl
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I am a (Canadian) member of INTC's drip. Like Carl, I registered through Temper of the Times (www.moneypaper.com). There fees are maybe a bit high compared to other options (see the DRIP investing board for more detail), but everything went very smoothly and I had no problem with the fact that I was not American.

Mo.
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Another option is checking out the Canadian Shareowner Association at www.shareowner.ca. They are a non-profit educational organization, and they also offer DRIP-like investing through their Low Cost Investment Program for a limited number of companies (no Nokia unfortunately!). After a C$8 set-up fee for each company, subsequent commissions are 0.4% of the transaction value (minimum C$4). Purchases must be made in C$, but the exchange rate is comparable to ING Direct or TD Waterhouse's buy rates.

There is an $89 annual membership fee which provides you with access to the program, as well as provides 6 editions of their Shareowner magazine.

I recommend them.

For those who used Moneypaper, I would appreciate more information on how it works. So you pay the US$20 or so fee to Moneypaper (by $US cheque? credit card?) and then do you buy subsequent shares through the security's DRIP plan with $US cheques?

Thanks,
Shawn
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For those who used Moneypaper, I would appreciate more information on how it works. So you pay the US$20 or so fee to Moneypaper (by $US cheque? credit card?) and then do you buy subsequent shares through the security's DRIP plan with $US cheques?

Shawn,

That's exactly how it works. I went to the Moneypaper website (www.moneypaper.com), selected KO as the stock I wanted to purchase, and set the number of shares I wanted (IIRC, it can be any number less than 100). After submitting the information, they created an order form, and calculated what I would owe. The total price they ask for is the security price + 10% (in case the stock jumps before your order is processed) + $20 fee. They reimburse the difference between what you send them (less the fee of course) and the actual price of the security. I printed out the form, sent it in with a $US money order, and everything was painlessly set up for me.

All my transactions after that have gone through Equiserve, who administers the KO DRP plan.

Hope this helps!
Carl
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Hi,

I've been lurking for a month or so and haven't found the answers to the following questions as of yet. Maybe someone would be kind enough to help me out.

Can anyone tell me what the tax implications of a Canadian buying US Drips are? Do you need to register with the IRS and pay taxes to them as well as to Revenue Canada? If so, doesn't the taxation outweigh return? Also, what about the exchange rate? Doesn't it make US investments less desirable?

Cheers,
Andrew
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No you don't have to register with the IRS. The company paying the dividend will withhold a with-holding tax for non-residents(I believe 15%). You can then claim this as a credit on your Canadian tax return so you are not taxed twice. I'm not sure of the exact mechanics but this is the basic info. Perhaps someone more knowledgeable than I am can give you more detail. On the matter of exchange rates - this just adds one more dimension of risk/reward to the equation. If our $ continues to fall you will gain from the exchange - the opposite of course is true if our $ strengthens(maybe someday)
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Hi Fellow Canadian FOOLs

1. To anyone interested in US DRIPs send me your e-mails behind the boards and I'll send you an article I wrote for Canadian MoneySaver magazine about how to go about DRIPping in the US of A for Canadians.

The tricky bit is the banking. Securities law allows two options:

1. Cheques cashable at a US bank, or

2. Cheques from a foreign bank that are physically cashable at a branch in the US of A.

1 is impractible. How many US banks in your neighbourhood. I use Bank of Montreal but the cheques are cashable at the branch in New York City. Don't just open a US dollar account at your bank. It must be a $US account cashable at a US branch.

2. An excellent source of info on US DRIP Cos. that allow foreign investment is:

http://www.netstockdirect.com

They also list Cos. that allow direct purchase. Do not be fooled by minimum investments of $500 or $1000. These Cos. usually allow you to spread the amount out over 5 or 10 months with an automatic bank withdrawal.

Finally, because many US Cos. have fees and because of the exchange rate of .75% each way I favour fee friendly US DRIPs for Canadians. Currently I have 8 US DRIPs with 7 fee free.

OperaBob
Victoria, BC

PS: There are 2 DRIP boards: Companies & Basics. We discuss Canadian DRIPs there quite often. Come on ovah (as Shania would say!)
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OperaBob,
I would love to get your article. Thanks in advance.
...a fellow Canuck
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I'd like a copy of that.

Thanks,

Salmosalar
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Thank you for your posting. I am just getting back into the Fool and DRIPS themselves.

You made mention about automatic bank withdrawals. Are these available to us as Canadians or more specifically Canadian residents? For example, do you have automatical withdraws going through your account at the Bank of Montreal? If this is the case, is the key having a cheque that clears through BMO's branch in NY?

(About a year ago, I tried to invest directly with Pfizer. I provided an RBC cheque that clears through through a branch in NY, but Pfizer rejected it saying that the cheque wasn't drawn from a US bank and thus couldn't be cleared through the Fed Reserve system. I think Pfizer was wrong. It may be a case where I have to educate the company. Perhaps an explanatory letter from the RBC might be useful.)

I would greatly appreciate your comments.

Thanks,

Northwind100
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(About a year ago, I tried to invest directly with Pfizer. I provided an RBC cheque that clears through through a branch in NY, but Pfizer rejected it saying that the cheque wasn't drawn from a US bank and thus couldn't be cleared through the Fed Reserve system. I think Pfizer was wrong. It may be a case where I have to educate the company. Perhaps an explanatory letter from the RBC might be useful.)


I recently started a DRIP with Pfizer. I had a similar cheque but it was through the Bank of Montreal. On the cheque I used a highlighter to highlight the US address and I also circled it with a pen, and even placed an arrow on the cheque pointing to the US address. I probably over did it a bit but it worked. I received the confirmation of the purchase so it did go through.
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I am interested in Pfizer but also i am a canadian citizen who is interested in Drips on a monthly basis.If i send a cheque in Canadian will Pfizer convert it into American funds and purchase stock.Also is it rrsp eligible since it is in american funds.
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I am interested in Pfizer but also i am a canadian citizen who is interested in Drips on a monthly basis.If i send a cheque in Canadian will Pfizer convert it into American funds and purchase stock.Also is it rrsp eligible since it is in american funds.

They will not accept Candian cheques. You must send US$ funds drawn on a US bank. US DRIPs are not eligible for RRSPs.
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