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To make my original post more clear, I have two examples below:
1) If I own Prudential. Under the DRIP program, I get a dividend from Prudential on July 31st. Let's say that Prudential stock is trading at $123 per share today but for unknown reasons spikes to $130 on July 30th. When I get my dividend on the 30th, I will get 15 shares at $130. One week later, the stock reverts to $125. I get fewer shares on the 31st than I would have if the stock stayed at $123.
2) If I had received a cash dividend rather than DRIP stock, I am able to choose to buy Prudential or I can increase my position in Realty Income as I feel that the Reit is going to do better in the future, and it is a bargain today. Instead of being forced to reinvest in Prudential, I use the dividend cash for other purposes.
Lastly, I have a blend of growth stocks and dividend stocks as well as ETF's. I like to use my dividend cash to expand my portfolio as I wish. BUT, someone told me that DRIP dividends are issued at a discount, and I am wondering if that is true.
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