It’s the time of year when winter is but a memory (for most of us), taxes have been filed and proxies are filling our mailboxes. As I review the filings and determine how to cast my votes, I’m struck with one of these off-the-wall thoughts that hit me every now and again. I wondered how much was earned – and the margins derived – via the annual proxy season. I didn’t delve into the number of trees sacrificed though I’ll wager it’s fewer than before electronic transmissions.
It’s been about two years since I first invested in Australian issues, choosing to take a slow approach while I obtained some practical experience first hand. Certainly many of the yields are good, but the economy – much like Canada – is resource based. Then there’s the whole franking deal. Plus the foreign exchange conversion – but this has been relatively stable at 75 – 80 cents per USD. Add to that, until recently the selection was limited to ADRs or using a cost prohibitive foreign desk.
Today I went on a quest, spurred by an article I encountered a few days ago over at the StreetAuthority, titled Reinvest Stocks At Discounted Rates With This Strategy. OK, I’m a sucker for a bargain. And this is a technique I’ve previously used. So what’s different? One comment in the article caught my eye. “there are a number of companies that offer DRIPs with a discount. They are just really hard to find”. I thought “Oh really. How hard could it be? Well, let me tell you …
I started with Amstock. They (and their sister company CST) are privately held and owned by Pacific Equity Partners out of Australia. I had to do some cutting, pasting and sorting but I came up with a list of 18 companies:
ACFN, AFG, BXMT, BRT, CECE, EFSI, ETP, HT, MEG, MNR, NNN, OLP, SBTB, SSW, SSS, SUBK, UMH, YORW
Can’t say I’d be buying many of these myself , but a good start to my journey.
So I then went to the big one – Computershare. Since I just bought some of their stock, I figured to get answers. Wrong. They do provide the information on their website, but it’s two additional clicks to get the answer. With the thousands of plans they manage, there just had to be a file to download. Nope. Well I’m not that bored (at least today) to go to that effort. So strike one.
Next up was Wells Fargo. They managed Piedmont’s plan (which had a discount). They manage about 160 plans and as a stockholder, maybe they’d cut me a little slack. Strike two. They’re even worse. You go to the list on their site, click on the company, then click on the document so you can read each and every prospectus to see if a discount is offered.
While I still had a strike left I gave up without checking Broadridge or DST. These are smaller – Broadridge has Disney as a client and I know no discount is offered there. At least it provided a semi-productive way to spend a rainy day.
With apologies to Tom Cochrane (Life is a Highway), been humming his tune today after completing two purchases. The first took three weeks and an assist from my broker. My limit order finally hit (and went below) but the Aussies didn’t execute it until getting a call from the states. So now I’m the proud owner of Computershare. I then submitted an order for Broadridge which executed prior to the close. With my current Wells Fargo stake, one could say I man one of the toll booths on the dividend investing highway.
Alright, I’ll elaborate. All three companies are Transfer Agents. Meaning companies hire them to pay out dividends, manage ownership records, run the DRIPs (if the companies have one), and so on. These three companies control close to 60% of the market with private companies splitting the remainder. Of the 35 most popular DGI owned stocks, 30 use these three companies.
At today’s close, BR’s yield is 2.27%, WFC is at 2.81% (both quarterly) and CMSQY sits near 3.3% (twice per year). And as the popularity of dividend investing continues to rise, I have all of you to thank – because without you as an investor there would be no need for Transfer Agents.