Unlike in the US, where there are over 1800 companies that offer Dividend Re-Investment Plans (DRIPs) and related Optional Cash Purchase (OCP) plans, the number in Canada has arguably flat lined or is on a decline. Due to mergers and acquisitions Canadian DRIP investors have recently seen plans for Terasen (formerly B.C. Gas) and Dofasco effectively end.
And so it was with great anticipation (and dare I say excitement) that the DRIP community eagerly awaited details of the Manulife DRIP plan, due out months following an original announcement late last year. Manulife has shown tremendous growth with solid financials, has initiated a global expansion, and is quite literally flush with cash.
Needless to say, once the details were announced yesterday, there was a collective sigh of disappointment. Here are the areas of the plan that are so troubling:
Optional Cash Purchase Fee: $15The fee structure runs contrary to one of the fundamental reasons I personally have really come to value DRIPs. Not only are fees alien to the exceeding majority of Canadian plans, some actually offer discounts on the share price for reinvestment. Also, charging investors a fee to reinvest their dividends into the distributing company is a little shaky morally. From an investor’s perspective, this is comparatively the worst DRIP plan in North America. Too bad.
Dividend Re-Investment Fee: 5% to a maximum of 6$
Share Sale Fee: $20 + $0.06/share
(Note: Compared to the DRIP, buying Manulife would even be significantly cheaper via Canadian ShareOwner – i.e. CSO would only charge $9.00 for a purchase, dividend reinvestment is free, and a sale costs $15 + 3¢ per share.)