|Helping My Daughter Through ShareOwner
Published Tuesday, November 26, 2013
I’m delighted to announce a guest-post from a long time Dividend Ninja reader. A couple of weeks ago, Steve received my newsletter issue on DRIPs and SPPs.
He pointed out to me, that as well as transfer agents such as Computershare, another option for dividend investing partial shares is through ShareOwner. I wasn’t familiar with the service, so asked him more about it. It seemed to be a good alternative to Computershare.
One thing led to another, and I asked Steve if he would be willing to write about ShareOwner, as he was familiar with using the service. Please welcome Steve and for the time he has taken to contribute and share his experience with Dividend Ninja readers….
A couple of years back when I was developing a strategy for teaching my teenage daughter about dividend investing, I faced a dilemma. I wanted to invest a relatively small amount of money, less than 10K, to build a portfolio of dividend paying companies. Yet I wanted to provide her with the benefit of selecting a number of different dividend growth companies to invest in. The idea was we could watch the value of the portfolio grow through dividend reinvestment..
There were a number of potential problems with this approach:
During the investigation of other options, I came across the Canadian ShareOwner brokerage.
- We would be faced with a mountain of paperwork if we want to enroll in each company�s direct share purchase plan individually
- TD Direct Investing, along with most of the other brokerage firms, would only reinvest dividends if the quarterly dividend pay-out would cover the purchase of a single share.
- Edward Jones would do dividend reinvestment purchases of fractional shares. But the brokerage fees were cost prohibitive for such a small portfolio.
ShareOwner offers dividend reinvestment of fractional shares, and a one-time brokerage fee of only $40 per order. That one-time fee can be used to purchase more than 20 stocks in a single order (i.e. optimal for building a portfolio of dividend paying stocks for a very low commission). ShareOwner also gives you the ability to invest in 450 of the largest Canadian, US stocks and ETFs.
After making the initial deposit, we carefully selected 15 dividend growth companies (7 Canadian and 8 U.S.) that my daughter was familiar with. We also chose companies where I was comfortable with the company�s track record of raising dividends.
Canadian Shareowner has worked perfectly for this. My only area of concern with the overall scheme is that when U.S. dividends are paid, and additional fractional shares of the companies are purchased, we are faced with a currency conversion. This is unlike an RBC Direct Investing account, where you can partition your account in Canadian and U.S. funds, such that currency conversion is not required when dividends are paid.
We have been very happy with our progress, since opening the Joint In-Trust account in August 2011. We have grown our portfolio 47% through capital appreciation and dividend re-investment. We have yet to make an additional deposit, although I have offered to match my teenage daughter�s contributions on a one-for-one basis. Perhaps I may have to offer to up the ante. If anyone has suggestions on how I can encourage a teenage girl to make deposits to her dividend investment portfolio directly, instead of indirectly investing in Shoppers Drug Mart through purchases of make-up and other teenage girl necessities, I would welcome any suggestions!
Disclaimer: This post was not sponsored by ShareOwner, and is not an advertisement or endorsement.
This article was originally published here