Discount Broker Overview for Dividend Investors

Questrade Discount BrokerSince I have been investing with dividend stocks back in 2009, I have used 5 different discount brokers (not so discounted back in the day though) and it’s a competitive market out there. One year broker A is ahead and the next it is discount broker B. They catch up to each other and try to outdo each other until they have spent enough money.

Not all discount brokers review is done the same. It’s often geared towards a new investor with little money rather than a seasoned investor looking for specific features. In the case of a dividend investor, it’s important to understand what you need to be successful with putting your dividend at work for compound growth.

While fees are important when you start, nearly all discount brokers provide a similar cost structure once you reach a minimum across all of your investment accounts.

Dividend Investor Requirements

There are 2 main requirements that I must have with a discount broker for my dividend investing strategy. It must:

  • Support DRIP (Dividend Re-Investment Plan)
  • Provide the DRIP discount

DRIP is a powerful concept as it allows me to always have my money at work and to generate compound growth. Money at work is more important at this early stage for me than to pick my purchase price so I let it ride.

Investor Requirements

When it comes to simply being an investor there are some extra requirements needed to be successful.

  • Transaction costs to keep your overhead low. Important to invest small amounts continuously.
  • Support dual currency accounts for CAD and USD. The US is the largest economy in the world, why not benefit from it.
  • Support journalling for an effective DLR Norbert Gambit currency conversion.
  • Spousal account for managing all of the accounts in one place.
  • Provided research for investment education
  • Customer support for investors in need.

Discount Broker Comparison

This table is strictly set up to highlight what is needed for a dividend investor but any investor can leverage the information as a starting point. If you are an ETF investor, Scotia iTrade or Questrade might work better for you since they have free ETF trading on certain ETFs. The grades may differ from other reviews done by the Globe & Mail or Canadian Business but in the end, it’s all information that you need to be aware of to settle.

While it’s good to have all your accounts with the same financial institution, don’t just settle for the discount broker at your bank if it doesn’t meet your needs.

Discount BrokersScotia iTradeRBC Direct InvestingBMO InvestorLineTD Direct InvestingQuestrade
Dual CurrencySomeYesYesNoYes
Synthetic DRIPYesYesNoYesYes
DRIP DiscountYesYesNo?Yes
Spousal AccountYesYes?YesYes
Customer ServiceYesYesYesYesYes

The basics for investors are covered above. If there is something specific you are looking for such as real-time quotes or transaction speed, you will have to inquire further. The red boxes are a clear no for my needs. Around half of my portfolio is in US currency and it’s important that it should be tracked properly and that transactions are executed in the appropriate currency. DRIP is also critical for my investing strategy. With the discount brokers above, that leaves RBC Direct Investing and Questrade and I have an account with both of them. Feel free to contact me if you want details on either.

I started with Scotia McLeod back in the day and then moved to Scotia iTrade as it was introduced only to move to RBC Direct Investing once I started investing in US conglomerates. I have since opened a Questrade account for my spouse mostly since we are starting accounts for her but I also wanted to understand both platforms. At some point, I do intend to consolidate but that’s not a rush as long as I have the full account such as a TFSA in one of them.