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I am considering enrolling some of my dividend stocks in dividend reinvestment plans (DRIPs), particularly in cases where the DRIP includes a discount on the price of shares acquired in the plan. Are you aware of any reliable, up-to-date source of information on DRIP discounts?

You can find a list of DRIPs and their associated discounts, if any, on third-party websites such as and But treat these sites as a starting point for further research, as DRIP discounts come and go and the information may not be current.

Some companies have recently dropped their DRIP discounts. Bank of Montreal and Toronto-Dominion Bank , for instance, both announced 2-per-cent discounts in the spring of 2020 to fortify their balance sheets during the early stages of the pandemic. However, now that both banks have built up strong capital levels, the discounts no longer apply. Some other companies that offered discounts in the past, such as Superior Plus Corp. , have suspended their DRIPs altogether.

The good news is that dozens of other companies still offer DRIP discounts, such as the 2-per-cent discount available from Fortis Inc. , and the 5-per-cent savings offered by Algonquin Power & Utilities Corp. .

One way to confirm whether a discount is currently in effect is to read the company’s latest dividend announcement, which will often mention the terms of its DRIP program. If you can’t find the information there or elsewhere on the company’s website, contact its investor relations department or transfer agent.

Keep a couple of things in mind if you are considering a DRIP.

First, the surest way to get the discount is to enroll in a traditional DRIP operated by the company’s transfer agent. However, there are usually costs involved in registering shares in your own name, which is a required step in the enrolment process. You’ll need to balance these costs against the savings from the DRIP discount. You can avoid such costs by signing up for your broker’s “synthetic” DRIP program instead, but first ask your broker whether it honours the companies’ DRIP discounts. Not all brokers do.

Second, and perhaps most important, don’t let the DRIP discount tail wag the investment dog. If a stock checks off all of your boxes – its revenue, earnings and dividends are growing, its long-term outlook is favourable and the shares are selling at a reasonable price – consider any DRIP discount to be a bonus. If, on the other hand, a company has an uncertain outlook, don’t let a juicy DRIP discount influence your decision to invest. You may live to regret it.

I have a follow-up question regarding your column last week, ‘Dividend investors, don’t lose sleep over the OAS clawback.’ How would the math change if the investor resided in Quebec rather than Ontario? Would that change your conclusions?

The conclusion is the same whether you live in Quebec, Ontario or any other province or territory. Even taking into account a potentially higher Old Age Security clawback caused by the “gross-up” of Canadian dividends, they are still much more tax efficient than U.S. dividends (or interest) thanks to the Canadian dividend tax credit.

The exact numbers vary depending on the specific marginal tax rates in each province. To analyze your own situation, try one of the free calculators available at (Note: The website has separate calculators for Quebec.)

I own two exchange-traded funds – the BMO Long Federal Bond Index ETF (ZFL) and the Vanguard U.S. Total Market Index ETF (VTI) – that reported income to me on a T3 slip even though I did not receive any cash or units of the ETFs. My adviser is unable to tell me what these non-cash distributions are or why I should pay tax when I didn’t receive anything. Can you explain what’s going on?

Non-cash distributions – also known as reinvested or “phantom” distributions – are common in the ETF industry and generally reflect capital gains that a fund realized, and subsequently reinvested, during the year. In late December, funds typically “distribute” these gains (net of capital losses) to unitholders, who are responsible for paying capital gains tax. No cash changes hands, however, because it is just a paper transaction that transfers the tax liability.

Reinvested distributions are included in income reported on T3 slips but are not broken out separately, which means unitholders should check the ETF provider’s website to determine which of their funds, if any, had reinvested distributions. Fund companies usually publish this information on their websites in December. It’s important to add the amount of the reinvested distribution to the adjusted cost base of your units to avoid paying more tax than necessary when you eventually sell your units. (Want more information on phantom distributions? I have written several previous columns that you can find with a Google search.)

E-mail your questions to I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.

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