Tag Archives: equities

When Can I Spend a Dividend or Distribution Payable into my BMO InvestorLine Account?

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Recently, I checked when a dividend paid to a shareholder is actually credited to a BMO InvestorLine account. I discovered it is reported in the transaction history and in the cash balance for the account the day after it is payable but the transaction was back dated to the correct day. That left me wondering when I could spend a dividend or distribution: on the day it should have been paid into my InvestorLine account or the day after.

I Asked InvestorLine Using the Secure MyLink Email Function

I like getting answers to my investing questions in writing whenever possible. It gives me more time to reflect on what is said and to decipher the meaning. It also gives me a paper trail, or at least an electronic trail, in case things don’t happen the way I was told they should.

So I wrote a note using MyLink to ask, among other things, “If I tried to buy stock or a GIC on July 31 using the dividend I should have been paid on July 31, would the transaction go through properly?”

BMO InvestorLine Says the Dividend or Distribution Can be Spent on the Day It’s Earned

A bit to my surprise, the reply from the Client Correspondence Specialist said if “…you wish to trade using the proceeds, and you may certainly do so online. Kindly ensure to accept the warning message that may prompt you about insufficient funds for the trade.”

My understanding based on this email is that I can spend the dividend on the day it was payable, in this example on July 31, provided I accepted any warning messages from the system cautioning me that I was short by the amount of the dividend on the amount I required to complete the transaction.

A Cautious Investor May Prefer to Wait for the Dividend or Distribution to be Posted

It is usually clear what amount you should be receiving in a dividend or distribution payment. The source usually issues a press release stating what the amount will be per share.

That said, a very cautious investor might prefer to wait one more business day to be sure the payment arrives as planned into their InvestorLine account before re-investing the money.

If, however, there is an investment opportunity available immediately that may be gone by the following day, it’s encouraging to know InvestorLine will permit the purchase to proceed based on acceptance of the warning message.

Why Does It Take an Extra Day for the Dividend or Distribution to Appear in an InvestorLine Account?

I did also ask why it takes an additional day for the cash to show up in an InvestorLine account and for the Transaction History to be updated (and back dated.) The answer is a simple computer system requirement. According to the MyLink Client Correspondence Specialist, “it takes an overnight update to reflect the change in the account online.”

In other words, the account cash balance is not working in real time. There are other examples of this. For example, if you place an order to buy a GIC, your InvestorLine cash account balance does not debit the purchase immediately.

My Conclusion
I’m somewhat reassured to discover that InvestorLine just has a cumbersome computer system and not that it is deliberately withholding access to my distributions and dividends for a day for their own purposes. Sometime, I would like to test this process and see what warning message one receives if purchasing an investment using a distribution on the same day it is paid. Right now, however, I’m not in a buying mood.

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Have you ever re-invested your dividend or distribution on the day it was earned? Did it proceed smoothly? Please share your experiences with a comment.

How Can I Move a Stock I Hold from the Canadian Side to the US Side of my InvestorLine Account?

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Setting up a US dollar sub-account within my InvestorLine RRSP account was easy. I just had to pick up the phone and speak to an InvestorLine rep. The trickier part was deciding what to hold in the US ledger and how to get it there. As a first step, I decided to test transferring some shares of a stock from the Canadian dollar side of my account to the US dollar side.

Here’s what happened.

Picking a Stock to Move from CAD to USD in my Account

I had some TD shares in my regular InvestorLine account. I had bought them on the TSX using Canadian dollars. They pay me my dividends in Canadian dollars. Since I bought some of them during the recent fire sale, they display a tidy little capital gain in the gains and losses column.

TD is also listed on the stock exchange in New York. If Americans buy it from that exchange, they pay US dollars for their shares. They are paid the quarterly dividend in US dollars. If they sell their holding, they are paid in US dollars.

A stock that is held on two (or more) exchanges like this is sometimes called inter-listed.

But you don’t have to be an American to buy TD shares on the NYSE or to sell them on it. Your self-directed brokerage may let you hold stocks in a US dollar ledger and lets you keep your profits in a US dollar cash account or money market fund. BMO InvestorLine allows this.

So I decided to move some shares of TD from the Canadian side of my account to the US side and watch what happened.

How to Transfer Shares from the Canadian to the US Journal for an InvestorLine Account

At this time (July 2013) to move shares from the Canadian dollar journal for my InvestorLine RRSP to the US dollar journal, I have to phone InvestorLine.

  1. Call InvestorLine at 1 888 776 6886.
  2. Provide your InvestorLine account number and your access password.
  3. Ask the agent to transfer the correct number of shares from your Canadian dollar account to your US dollar account.

Can I Transfer Just Some of My Shares to the US Side of my InvestorLine Account?

Being someone who likes testing things, I requested to transfer only 100 of my TD shares to my US dollar ledger. InvestorLine was quite agreeable and had no problem leaving the rest of the shares in my Canadian dollar ledger.

The agent did warn me, though, that for a day or two I will see the shares listed twice. He cautioned me not to over-estimate my holdings while waiting for the record keeping to straighten out. I assured him I wouldn’t sell shares I don’t have.

Can I Request a Transfer at the Same Time as I Create a US Side to my Account?

Even though I contacted InvestorLine using a toll-free number, and even though there was no wait time (!) to speak to an agent, I still combined my requests into a single call.

So yes, you can request the creation of a US side to your account during the same phone call as you request a transfer of some shares from the Canadian side of your account to the yet-to-be-created US side. How efficient!

What Happened the Business Day After I Requested the Transfer to my New US Dollar Sub-Account

So I made the request to create a US side for my account yesterday, on Thursday.

Today, on Friday, I logged in to my InvestorLine RRSP account to see what had changed. Here’s what I found:

Request made July 11 2013 to transfer 100 shares of TD when I called to create the US ledger.

On the morning of July 12 2013, as warned, I can see two line items in
my Transaction History:

Transaction Date: July 11, 2013
Settlement Date: July 11, 2013
Activity Description: Transfer out
Description: Toronto-Dominion Bank
Symbol: TD
Quantity: -100
Price: blank
Total Amount: 0.00 C

Followed by another line item
Transaction Date: July 11, 2013
Settlement Date: July 11, 2013
Activity Description: Transfer out
Description: Toronto-Dominion Bank
Symbol: TD
Quantity: 100
Price: blank
Total Amount: 0.00 U

NOTE: They BOTH say transfer OUT.

When I look at My Portfolio > Holdings
In the Cash balances section, there is a new line
Description / symbol: U.S. $ Cash
Quantity: 0.00
Average cost: blank
Current price: 1.0380 C
Market value: blank
Unrealized gain/loss: blank
Unrealized gain/loss %: blank
Portfolio %: 0.00%
Details: blank
Action: blank

Not surprisingly, the Cash equivalents and Fixed income sections are the same as always.

In the Equities section, there is a change.
I had requested they transfer only 100 shares of my TD holdings from the Canadian side to the US side of the account.

So this morning there are two lines for TD:

Description / symbol: Toronto-Dominion Bank – TD
Quantity: (original balance less 100 shares)
Average cost: same average cost as all week
Current price: 84.88 (yay! I bought during the dip!)
Market value: an enormous sum
Unrealized gain/loss: another enormous green amount
Unrealized gain/loss %: +4.36% (this is a blended average from multiple buys and sells)
Portfolio %: ***%
Details: two clickable icons
Action: the list is asking me to Select a chosen task if desired.

And the second line

Description / symbol: Toronto-Dominion Bank – TD
Quantity: 100
Average cost: same average cost as all week
Current price: 84.88
Market value: 8,488.00
Unrealized gain/loss: +354.36
Unrealized gain/loss %: +4.36%
Portfolio %: ***%
Details: two clickable icons
Action: the list is asking me to Select a chosen task if desired.

At this point, it looks like I still own 180 shares of TD in the Canadian side of my ledger.
That’s what they warned me when I requested the transfer after phoning in. Apparently on Saturday or Monday (he said “the next day”) I should see the Canadian TD shares vanish and the American TD shares appear.

Stay Tuned!

I’ll update this when the shares appear on the US side and describe how they are displayed and/or where.

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Do you find it tricky to remember you no longer own certain shares in your Canadian trading account because they’ve been journaled to the US side but they are still misleadingly displayed as Canadian? Have you ever sold shares you don’t have? Please share your experiences with a comment.