National Bank Direct Brokerage’s Fully-Paid Securities Lending Program: Is it Worth It?

I’m going to save you some time by answering the burning question right away. In my case, I quickly came to the conclusion that National Bank Direct Brokerage’s Fully-Paid Securities Lending Program isn’t worth it. I am literally earning just a few pennies from the program. In my opinion, to truly benefit from the program, you need to have a very large non-registered portfolio in both U.S. and Canadian dollars. That amount would need to be several hundred thousand dollars for the program to be worthwhile.

This year, winter in New Brunswick feels much tougher to me. We’ve had extremely cold temperatures on a regular basis. Until recently, there wasn’t much snow, but that all changed on Thursday. Here’s how it looked...

We received a lot of snow! And there’s more on the way.

January marked my first full month with National Bank Direct Brokerage’s Fully-Paid Securities Lending Program. When I enrolled in the program several months ago, it didn’t activate because I had a margin debt linked to my Canadian non-registered account. I completely paid off my margin debt in mid-December, and ever since, I’ve noticed some lending activity.

Some of the stocks I hold in my U.S. portfolio and Canadian non-registered portfolio have been borrowed. Whenever there’s activity, I see it in my "Activity" section. I also receive a PDF notification whenever something happens in terms of lending activity. Currently, my shares of Brookfield Asset Management Inc. Class A Limited Voting Shares (BAM.A) and iShares S&P/TSX Capped REIT Index (XRE) are being lent out.

In terms of earnings, I’ve sincerely only made a few cents from the Fully-Paid Securities Lending Program. It hasn’t been a lucrative experience—at least not so far.

Here’s what I’ve learned so far:

• To be eligible, your margin debt—if you have one—must be completely paid off.
• Only the stocks you hold in your U.S. and Canadian non-registered accounts are eligible.
• You continue receiving dividend distributions even if your stocks are lent out.
• You don’t get to know who is borrowing your shares.
• There’s no specific list of stocks that can be lent; any stock you hold could be borrowed.
• You receive payment for the stocks you lend around the 6th of each month.
• If a payment is issued to you, a service fee is also charged, proportional to the amount earned.

The TSX closed this past Friday’s session at 25,483.23, down 215.28 points (-0.84%). My non-registered portfolio closed at $148,835.53, my U.S. portfolio at $6,065.49 USD, my RRSP stocks-only portfolio at $86,980.58, and my TFSA portfolio at $138,206.05. I’m doing okay, but at this pace, I probably won’t be able to reach $500K by the end of the year.

So far in February, several of the stocks I hold have increased their dividend distributions:

• Feb 14 – TC Energy (TRP) raised its dividend by 3.3%
• Feb 13 – Brookfield Corp. (BN) raised its dividend by 13%
• Feb 12 – Brookfield Asset Management (BAM) raised its dividend by 15%
• Feb 6 – Thomson Reuters (TRI) raised its dividend by 10%
• Feb 5 – TMX Group (X) raised its dividend by 5.3%

As a result, my dividend income from my non-registered and TFSA portfolios has reached $917 per month—quite an interesting sum! If I include the dividends earned inside my RRSP portfolio, my total monthly equivalent is $1,120.

Another good thing is that by the end of this month, I should exceed $6K in savings. I’m trying to stay focused on saving money, and I know I can at least reach my savings goal.