Stock Splits - Canadian Banks

Discuss your favourite picks, broker, and trading or investment style.

Stock Splits - Canadian Banks

Postby j831robert » 18 Sep 2011 17:46

Was tempted to divesify my bank stock holdings until I looked at the prices - certainly not a poor man's game anymore and I'm 'forced' to buy their preferreds instead of their common stocks if I want 'more bang for my buck'. I'm wondering what would trigger some of the more expensive banks to again venture into splitting their common stocks into a more affordable level ? Ergo, my BMO holdings were split 2:1 in 1993 and again in 2001.
j831robert
Silver Ring
Silver Ring
 
Posts: 673
Joined: 01 May 2005 14:12
Location: SW Ontario

Re: Stock Splits - Canadian Banks

Postby adrian2 » 18 Sep 2011 18:10

j831robert wrote:Was tempted to divesify my bank stock holdings until I looked at the prices - certainly not a poor man's game anymore and I'm 'forced' to buy their preferreds instead of their common stocks if I want 'more bang for my buck'.

Huge red herring. As long as you can afford to buy a single share, the price is a non issue. With most brokers, whether you buy 1 share, 67 or 987 shares you pay the same commission. IIRC, Canadian banks are priced under $100, surely you don't want to invest less than that.
User avatar
adrian2
Gold Ring
Gold Ring
 
Posts: 9227
Joined: 19 Feb 2005 09:42
Location: Greater Toronto Area

Re: Stock Splits - Canadian Banks

Postby randomwalker » 18 Sep 2011 20:00

adrian2 wrote:
j831robert wrote:Was tempted to divesify my bank stock holdings until I looked at the prices - certainly not a poor man's game anymore and I'm 'forced' to buy their preferreds instead of their common stocks if I want 'more bang for my buck'.

Huge red herring. As long as you can afford to buy a single share, the price is a non issue. With most brokers, whether you buy 1 share, 67 or 987 shares you pay the same commission. IIRC, Canadian banks are priced under $100, surely you don't want to invest less than that.


If one simply wants a diversified holding of Canadian banks one might look at BMO;s TSX Equal Weight Banks Index ETF symbol (ZEB)
randomwalker
Gold Ring
Gold Ring
 
Posts: 1772
Joined: 14 Apr 2005 20:55

Re: Stock Splits - Canadian Banks

Postby j831robert » 18 Sep 2011 20:26

Sorry fellahs! I own 3000 shares of BMO as a result of the two spits - the point I was trying to make (poorly obviously) is that preferreds are available around $25-27 while common shares are anywhere upwards to $80 each. I suspect that "John Q" can't afford to buy 1000 shares at $80 while he might stretch to $25K for 1000 shares and, like me, be willing to hold until the shares and/or dividend increase in value. The banks sing a song about 'the common man' but their pricing takes them out of his reach.
j831robert
Silver Ring
Silver Ring
 
Posts: 673
Joined: 01 May 2005 14:12
Location: SW Ontario

Re: Stock Splits - Canadian Banks

Postby deaddog » 18 Sep 2011 20:53

j831robert wrote: I own 3000 shares of BMO as a result of the two spits

Boy you gotta be old. BMO hasn't split since 2001 and i can't find where they split before that. :D
You don't have to buy in 1000 share lots, If you want to buy $25,000 worth of stock you can buy an odd number of shares. It doesn't matter if you have 1000 shares or 427 shares as long as you have $25000 worth of stock. A 5% dividend will give you the same cash each year.
"In theory there is no difference between theory and practice. In practice there is." Yogi Berra

When I’m wrong, I’m gone and I’m not wrong long!!
User avatar
deaddog
Gold Ring
Gold Ring
 
Posts: 1939
Joined: 19 Jan 2008 20:59
Location: Central BC/Arizona

Re: Stock Splits - Canadian Banks

Postby adrian2 » 18 Sep 2011 20:56

j831robert wrote:The banks sing a song about 'the common man' but their pricing takes them out of his reach.

There is no reason for sticking to 1000 shares for a buy. You can't buy fractional shares, but any integer (non-zero natural, for math purists) number would work.
User avatar
adrian2
Gold Ring
Gold Ring
 
Posts: 9227
Joined: 19 Feb 2005 09:42
Location: Greater Toronto Area

Re: Stock Splits - Canadian Banks

Postby newguy » 18 Sep 2011 21:20

Sorry, but wtf ???
User avatar
newguy
Gold Ring
Gold Ring
 
Posts: 7552
Joined: 10 May 2009 18:24
Location: Montreal

Re: Stock Splits - Canadian Banks

Postby scomac » 18 Sep 2011 22:22

adrian2 wrote:
j831robert wrote:The banks sing a song about 'the common man' but their pricing takes them out of his reach.

There is no reason for sticking to 1000 shares for a buy. You can't buy fractional shares, but any integer (non-zero natural, for math purists) number would work.


Absolutely agree here. This is a non issue IMO. Rather than worry about how many shares your dollar will buy, concentrate more on keeping expenses below 1% of assets per annum. With current commissions at most discount brokers running + or - of $10 per trade, any trade in excess of $1000 could be justified; that's less than 20 shares of BMO at current prices.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
scomac
Gold Ring
Gold Ring
 
Posts: 5204
Joined: 19 Feb 2005 10:47
Location: The Greenbelt

Re: Stock Splits - Canadian Banks

Postby Sensei » 19 Sep 2011 07:08

Hi,

I think as a general rule of thumb, companies will split when their stock goes over $100 although their are many exceptions such as Apple, Google, even Little Berk etc. However, since as others have pointed out above, there is no longer a 'lot' mentality at work. 10, 25, 30, 55, no problem here as one of the little people.

Personally, I don't get the rationale for splitting in many cases. For example, did anyone benefit from the Bird split?? The stock was about 36 when they split. No big ups or downs since then. No change in dividend. No change in the company.
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
Sensei
Gold Ring
Gold Ring
 
Posts: 1245
Joined: 07 Mar 2008 22:22
Location: Tokyo

Re: Stock Splits - Canadian Banks

Postby ThinkDividends » 19 Sep 2011 10:02

I hate stock splits since I have to go back and adjust my spreadsheets. Big hassle with no direct benefit to me.
User avatar
ThinkDividends
Silver Ring
Silver Ring
 
Posts: 509
Joined: 02 Dec 2009 01:07
Location: Toronto, Ontario

Re: Stock Splits - Canadian Banks

Postby j831robert » 19 Sep 2011 11:29

Yup, I'm old and just for the record my first buy of BMO was in 1985 - 800 @29 1/4 (anybody else here old enough to recall fractional pricing), 1987 sold 200 @ 37.75, 1990 bought 200 @ 26.75 and 100 @ 28., 1992 sold 200 @ 43.50, Mar 1993 stock split and my 700 shares became 1400 @ 23., Feb 1994 crystalized 1400 shares at 29.125 (ACB) and later acquired another 100 shares, March 2001 stock split 2:1 at 30.936 providing an ACB on 3000 shares of 15.464. All the foregoing while I was a late newcomer to the game and in the Acquisitive Stage. Now, because I have 'acquired' I prefer to purchase in multiples of 500 or 1000 (easier math) but sure as hell couldn't have afforded to do so when we were raising our five kids and collecting a soldier's pay. :lol:
j831robert
Silver Ring
Silver Ring
 
Posts: 673
Joined: 01 May 2005 14:12
Location: SW Ontario

Re: Stock Splits - Canadian Banks

Postby newguy » 19 Sep 2011 12:03

j831robert wrote:Yup, I'm old.......I prefer to purchase in multiples of 500 or 1000 (easier math)

Actually slide rulers aren't used anymore and you can buy something called a calculator. :wink:

newguy
User avatar
newguy
Gold Ring
Gold Ring
 
Posts: 7552
Joined: 10 May 2009 18:24
Location: Montreal

Re: Stock Splits - Canadian Banks

Postby deaddog » 19 Sep 2011 12:21

j831robert wrote: (anybody else here old enough to recall fractional pricing), :lol:

Yup: Now i see where the board lot trading comes from. Back in the day when you had to phone your broker and he'd tell you that odd lots would cost more. The good old days with 3% commish, End of dayinfo, and no CNBC. :D :D
"In theory there is no difference between theory and practice. In practice there is." Yogi Berra

When I’m wrong, I’m gone and I’m not wrong long!!
User avatar
deaddog
Gold Ring
Gold Ring
 
Posts: 1939
Joined: 19 Jan 2008 20:59
Location: Central BC/Arizona

Re: Stock Splits - Canadian Banks

Postby j831robert » 19 Sep 2011 12:46

All of that - nice to see that that old dog ain't dead yet! Newguy - on the wall of my study hangs an abacus (look it up!), great for when the battery dies (purchased for the wall of my wife's office - she was a computer programmer using Fortran) and closer to hand is my old Alpina (a survivor from our car-rallying days and beats a slide-rule). :rofl: :thumbsup:
j831robert
Silver Ring
Silver Ring
 
Posts: 673
Joined: 01 May 2005 14:12
Location: SW Ontario

Re: Stock Splits - Canadian Banks

Postby pmj » 19 Sep 2011 12:58

One frustration of high-value stocks arises if you want to DRIP the dividends. To DRIP a 4% yield quarterly-paying stock requires buying 100 shares (and that's hoping that the yield stays above 4% until you've accumulated a few more shares and generated some safety margin). At $70 that's $7000 - a not inconsiderable sum...
Peter

Patrick Hutber: Improvement means deterioration
pmj
Gold Ring
Gold Ring
 
Posts: 1674
Joined: 27 Feb 2005 19:15
Location: Ottawa

Re: Stock Splits - Canadian Banks

Postby Mitzy » 02 Oct 2011 23:59

TD Bank has split several times over the years, and it's price was never over $100.
Mitzy
Newcomer
Newcomer
 
Posts: 1
Joined: 02 Oct 2011 23:48

Re: Stock Splits - Canadian Banks

Postby Pickles » 03 Oct 2011 11:43

pmj wrote:One frustration of high-value stocks arises if you want to DRIP the dividends. To DRIP a 4% yield quarterly-paying stock requires buying 100 shares (and that's hoping that the yield stays above 4% until you've accumulated a few more shares and generated some safety margin). At $70 that's $7000 - a not inconsiderable sum...


That's using a synthetic drip set up by your broker. If you pay the fee (can't find it on BMOIL but recall it was around $50) to get stock certificates and arrange your own drip with the company itself, you can drip with as little as 1 registered share.
Regards,
Pickles
User avatar
Pickles
Gold Ring
Gold Ring
 
Posts: 3524
Joined: 27 Sep 2006 09:44
Location: Toronto

Re: Stock Splits - Canadian Banks

Postby pmj » 03 Oct 2011 12:42

Is each dividend retained as cash until there's enough to buy a share - or is each dividend converted into a fractional share at the price on the dividend date? If the latter - do those fractional shares also earn dividends?
Peter

Patrick Hutber: Improvement means deterioration
pmj
Gold Ring
Gold Ring
 
Posts: 1674
Joined: 27 Feb 2005 19:15
Location: Ottawa

Re: Stock Splits - Canadian Banks

Postby Bylo Selhi » 03 Oct 2011 13:12

pmj wrote:Is each dividend retained as cash until there's enough to buy a share - or is each dividend converted into a fractional share at the price on the dividend date? If the latter - do those fractional shares also earn dividends?

You get fractional shares with each dividend payment in a corporate sponsored DRIP. This is because the stock transfer agent manages your holdings. Synthetic DRIPs, as offered by brokers, can only do whole share because their custodian, CDS, can only account for whole shares. (The US counterpart, DTC, does do fractional shares, so US brokers are able to offer synthetic DRIPs with fractional shares.)

And yes, your dividend payment is based on your holdings including the fractional part.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
User avatar
Bylo Selhi
Diamond Ring
Diamond Ring
 
Posts: 22691
Joined: 16 Feb 2005 11:36
Location: Waterloo, ON


Return to Stocks, Bonds, ETFs, Funds, REITS and More

Who is online

Users browsing this forum: No registered users and 6 guests