Overview

With dividend reinvestments, you can automatically reinvest your cash dividends into additional shares or fractional shares of the underlying stock. This means that when you receive a dividend, instead of getting paid out in cash, the money is used to buy more of the same investment.

Advantages of dividend reinvestments

Dividend reinvestments offer several advantages:

• Compounding returns: Reinvesting dividends allows you to buy more shares, which can lead to even more dividends. This can create a snowball effect, increasing your investment's growth potential over time.
• No commission: You typically don't pay any commission when reinvesting dividends.
• Fractional shares: You can buy fractional shares, so every dollar of your dividend is put to work.
• Dollar-cost averaging: Dividend reinvestments help you participate in dollar-cost averaging, which can reduce the impact of market volatility.

How dividend reinvestments work

When you turn on dividend reinvestments, your dividends are automatically used to purchase additional shares or fractional shares of the same investment. This typically occurs during market hours (9:30 am to 4:00 pm ET on weekdays) on the same day after the dividend has been deposited into your account.

Important notes:

• Dividend reinvestments may not always happen on the exact dividend payout day.
• Dividends can sometimes be delayed by 1-2 business days in appearing in your account, and dividend reinvestment will follow shortly thereafter.
• Shares are purchased in the open market, not through an issuer-sponsored reinvestment plan.
• Dividends are paid in the same currency as the account where you hold the stock or ETF.
• You can turn dividend reinvestments on or off at any time.
• Dividend reinvestments don't impact your total contributions.

Foreign exchange fees and dividend reinvestments

If you hold USD investments in a non-USD account, we'll charge foreign exchange fees when reinvesting USD dividends to purchase USD securities. This is the same way we apply foreign exchange fees on regular orders. Please note that we don't charge foreign exchange fees when you turn off dividend reinvestments in your non-USD account.

If you hold USD investments in a USD account, we don't charge foreign exchange fees regardless of whether you have dividend reinvestments turned on or off.

Tax implications

Dividend payments are considered income and are taxed accordingly depending on the account type where you hold the dividend-paying stocks.

• Registered accounts (like TFSAs and RRSPs): Dividends earned in registered accounts aren't taxed.
• Non-registered accounts: Dividends earned in non-registered accounts are taxed as income.

For more information on how dividends are taxed, please consult a tax professional.

Related articles

• View your dividend reinvestment activity
• Turn dividend reinvestments on or off
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