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Beginners Corner
Moderator is drppingsoprano

Date: 3/22/2018 8:47:40 AM
Frequently Asked Questions
Author: aB Country Flag
Subject: 19493/19524 - Re: RBC DIRECT INVESTING and automatic DRIP WTF?
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Message:
It is a DRIP, as in, if your dividends are enough to buy a full share, then they reinvest your dividends to buy you a share (without the commission fees). So yes it is a DRIP.

On this board, we differentiate a true DRIP, in that even if you do not have enough dividends to buy a full share, the Transfer agent will purchase fractional shares with that dividend. So all of the dividend gets reinvested.

A synthetic DRIP, is what most brokerages do, and only purchase full shares, with the residual as cash in the trading account. So any amount less than a full share is not reinvested.

If you ask a brokerage what the difference between a true drip and a synthetic DRIP is they might not be able to respond to you.
 
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