DRIP Investing Canada 2025 — Dividend Reinvestment Plans

Q: What Is a DRIP?

A Dividend Reinvestment Plan (DRIP) automatically uses dividends paid by a stock or ETF to purchase additional shares — instead of receiving the dividend as cash. Over time, DRIPs turbocharge compound growth: you own more shares, which pay more dividends, which buy even more shares.

What Is a DRIP?

A Dividend Reinvestment Plan (DRIP) automatically uses dividends paid by a stock or ETF to purchase additional shares — instead of receiving the dividend as cash. Over time, DRIPs turbocharge compound growth: you own more shares, which pay more dividends, which buy even more shares.

In Canada, DRIPs exist in two forms:

True DRIP: New shares are issued directly by the company at no commission, sometimes at a 1–5% discount to market price. Available for individual stocks through transfer agents.
Synthetic DRIP (broker DRIP): Your broker automatically buys whole shares on the open market using your dividend payment. No commission, but no discount. Available for stocks and ETFs at most Canadian brokers.

Which Canadian Brokers Offer DRIPs?

Broker	DRIP Available?	Type	Minimum?
TD Direct Investing	Yes	Synthetic	Must cover cost of 1 share
RBC Direct Investing	Yes	Synthetic	Must cover cost of 1 share
CIBC Investor's Edge	Yes	Synthetic	Must cover cost of 1 share
Scotia iTRADE	Yes	Synthetic	Must cover cost of 1 share
Questrade	Yes	Synthetic	Must cover cost of 1 share
Wealthsimple Trade	Fractional DRIP	Fractional synthetic	$0 (fractional shares)
National Bank Direct	Yes	Synthetic	Must cover cost of 1 share

Most brokers use synthetic DRIPs that only buy whole shares. If your quarterly dividend is $45 and the share price is $50, no reinvestment occurs — the $45 sits as cash. Wealthsimple Trade is notable for offering fractional DRIP, so every dollar of dividend is reinvested regardless of share price.

DRIP Compound Growth Calculator

Initial investment ($)

Annual dividend yield (%)

Annual stock appreciation (%)

Years

Without DRIP (dividends as cash)

With DRIP (dividends reinvested)

Extra wealth from DRIP

DRIP Tax Implications in Canada

TFSA and RRSP Accounts

Inside registered accounts (TFSA or RRSP), DRIPs are completely tax-efficient — dividends are reinvested with no tax consequence. This is the ideal setup for DRIPs.

Non-Registered Accounts

This is where many investors get caught off guard. Even when dividends are reinvested (not received as cash), they are still taxable income in the year received. The reinvested dividend is treated as income on your tax return, and your adjusted cost basis of the shares increases by the reinvested amount.

This means non-registered DRIP investing creates annual tax owing with no cash received to pay it — you must pay tax from other income. It also complicates ACB tracking: each DRIP creates a new lot of shares at a new cost.

  Best practice: Run DRIPs inside your TFSA or RRSP to avoid the non-registered tax complexity. In non-registered accounts, receiving dividends as cash and manually investing (or buying more shares) is often cleaner from a record-keeping perspective.

DRIP vs Manual Reinvestment

Factor	DRIP	Manual Reinvestment
Automation	Fully automatic	Requires manual action
Fractional shares	Only with select brokers	Buy whole units manually
Flexibility	Less — always reinvests same stock	More — can choose different ETF/stock
Commission	$0 (broker DRIP)	$0–$9.95 depending on broker
ACB complexity	High (many small lots)	Fewer, larger lots
Best for	Long-term passive income stocks	Rebalancing or diversifying dividends

Frequently Asked Questions

How do I enroll in a DRIP in Canada? +

Most Canadian brokers allow you to enable DRIP in your account settings or by calling customer service. In Questrade, you can enable the "Dividend Reinvestment" option per holding. At bank brokerages, you typically call or visit a branch. Once enabled, dividends are automatically reinvested whenever enough cash accumulates to purchase at least one share.

Do ETFs qualify for DRIPs in Canada? +

Yes. Most Canadian-listed ETFs that pay distributions (like XIC, VFV, XEQT, etc.) qualify for broker DRIPs. All-in-one ETFs like XEQT and VEQT do pay small quarterly distributions that can be auto-reinvested.

Are DRIPs worth it for small investors? +

Yes — especially with Wealthsimple Trade's fractional DRIP. For small investors with $100–$5,000 in dividend stocks, DRIPs ensure every dollar of dividend is reinvested immediately without any action required. The compounding effect over decades is significant even starting small.

Can I turn off a DRIP anytime? +

Yes. You can disable DRIP enrollment at your broker at any time. Once disabled, future dividends will be paid as cash to your account. Any shares previously purchased through DRIP remain in your account at their respective cost bases.

What Canadian stocks have the best true DRIPs? +

Many major Canadian banks and utilities offer true DRIPs with discounts: TD Bank, Royal Bank, Bank of Nova Scotia, BCE, Fortis, Emera, and Canadian Utilities have historically offered true DRIPs through their transfer agents (Computershare or TSX Trust). Check directly with the company's investor relations page for current DRIP details.