Registered Retirement Savings Plans (RRSPs) can hold a variety of qualified assets, including cash. Dividends from stocks you hold in your RRSP may be deposited in your RRSP as cash. You should be able to verify the source of the cash by speaking to your firm or financial advisor.
If you receive dividends and would prefer to purchase more shares instead of having these deposited as cash, you may be able to set up a dividend reinvestment plan (DRIP). A DRIP lets you automatically reinvest dividends by buying more shares without paying a commission. DRIPs tend to be offered by larger, well-established companies with a history of paying dividends. Check a company’s website to find out if they offer a DRIP. You can enrol yourself in the plan through the company’s transfer agent, or your investment firm may be able to do this for you. Learn more about DRIPs on GetSmarterAboutMoney.ca.