CEF DRIP PROGRAMS, Did you know...

wxman123

I suspect some of you know that many CEF's offer dividend reinvestment programs that allow dividends to be reinvested in additional shares on a discounted basis. Trying to find out how to take advantage of such programs is somewhat of a mystery. Most CEFs suggest that the funds need to be held by the Depository Trust Company, which would be a grand hassle for me. I have recently learned that Fidelity makes a conscious effort to take advantage of such programs such that my reinvested dividends on CEF's in my Fidelity account are purchased at a significantly lower price than the same dividends received by Vanguard. To me this is a BIG deal, but it's hard to find any discussion of the issue on the internet. Anyone else on top of this issue?

Crash

No. I've lately begun to use DSPPs, but not re: CEFs. Some plans are awful. Some do indeed offer value.
http://www-us.computershare.com/investor/3x/plans/planslist.asp?bhjs=1&stype=dspp
https://www.amstock.com/investpower/new_dp.asp

msf

I thought that VBS, like nearly every clearing brokerage, used DTC. That's certainly implied by their fee schedule, where they charge $50 to process a foreign security that can't be held by DTC.

If the clearing broker works with DTC, it seems that all you need to do (for the security to be held by DTC) is have the security registered in street name (which is the default at brokerages). See DTC page:
http://www.dtcc.com/matching-settlement-and-asset-services/issuer-services/how-issuers-work-with-dtc

So the problem may not be that your security isn't held by DTC, but that VBS isn't actively taking advantage of the DRIP discount that is available. Just a thought based on the information here; I've no additional info on how CEF DRIPs are handled.

Dennis Baran

You might wish to post this issue at the M* CEF forum because I know that a number of posters have exchanged their experiences with DRIPs there in the past.