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Originally Posted by speedster911
I am like you. I have stock dividends deposited in a cash account and then purchase what I want, when I want. Sometimes I dollar coast average into the stock paying me.
My reasoning- when your old like me, DRIP in specific stock would potentially mean I have more shares than I want. Additionally, a nice paying dividend stock that was doing well/attractive 30-40 years ago, potentially may not be a purchase I would make today( AT&T, IMB etc.) but the dividends are still OK so I may keep them.
On the flip side, I do reinvest distributions in almost all the funds I own.
I recognize that I have left money on the table over the years- But I sleep well with my approach and blessed to to have had it work well for me.
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Quote:
Originally Posted by speedster911
Sure its a win, not saying it wasn't.
Point I was trying to make is if I own several thousand shares of X stock, I take those dividends so I can eventually own thousands of shares of Y and Z stock - and from those dividends I buy ......
Someone stated spend the dividends at my age, but I still enjoy the up and down of the market. I don't go to Vegas, I gamble on stocks.
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I do similar - I tend to just grow my existing portfolio by investing in stocks I currently own. However, I like to pick and choose what I am buying in any particular week. It makes investing more interesting if I have to select my purchases rather than have it in "Auto DRIP" mode.
I am also trying to build up certain stocks and ETF's (i.e., I buy one Berkshire (B) per month. Although that is technically a stock, I consider it a type of mutual fund). I'm also trying to build certain sectors, so doing everything thru DRIP defeats that option. I'm getting a decent amount of dividends each month and add my own money so my portfolio is growing - I only have a few more years before I stop working and will be using my portfolio to live on. Like many, I am catching up and wish I had started investing at a much younger age - but, I'm getting there.
Lastly, all of my dividend stocks (except 1) are "dividend aristocrats", so they are well established companies with reliable dividends.
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Originally Posted by zakthor
Im missing something basic.
Arent dividends taxed as income?
Instead of reinvesting in the dividend stock shouldn’t you just put the dividends into an etf like vt?
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Yes, dividends are taxed and some worse than others if they are not "qualified". Therefore, I tend to hold dividend paying stocks in my IRA and Roth. My ordinary account is used for growth stocks.