Synthetic Dividend Inquiry

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An owner of MIC told me there was no DRIP available, but the RBC trading platform offers DRIP of this stock. Why do brokers offer synthetic dividends? Is there anything in it for the broker, does anyone know? Also, if a company has a DRIP and they payout special dividends, are the special dividends also reinvested? Thanks!

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Asked on August 28, 2020 11:54 am
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Thanks!

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Posted by Denise LeBelle
Answered on August 28, 2020 8:59 pm
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A brokerage will indeed start up DRIPs for companies that lack them. To be honest, I don't there is much in it for them. It's just kind of something they offer. A perk of being a client I guess. Unless there is a back end arrangement with the company of course, where they don't want to operate their own DRIP, so they outsource it to a third party. This definitely does exist.

In terms of special dividends, as far as I know yes, they are re-invested. I am through Questrade, and any special dividend I've gotten has been DRIPed. If they aren't, contact your brokerage.

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Posted by Dan Kent
Answered on August 28, 2020 2:45 pm
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