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With a nice gain this morning, my portfolio just pushed past the $100,000 mark for the first time ever!
Onward to a million!
Congratulations on hitting $100k.
Great job hitting the 10% even with all the dividend cuts.
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You just made it lol. Don't go to any trouble calculating it but where would you have been if you moved nothing and just sucked on the Div cuts? 7-8%? I know I would have done something very similar to you had I set that goal.
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Thinking about making a big change to my approach with the portfolio and was wondering your thoughts.
I've automatically reinvested dividends back into companies that paid them since starting the portfolio in 2013. However, when I did that there were monthly cash contributions coming into the account and there was an $8.95 commission per trade. When my company was acquired in 2017, cash contributions to the IRA stopped, but I've continued with the dividend reinvestment.
In the past few years, the only way to rebalance or buy new stocks is to sell or trim other positions. This has caused me to sell a few winners to free up capital, only to see them continue higher. I've made some good moves as well, but it seems lately everything I've trimmed has done better than what I bought with the proceeds.
With zero commissions, I can pool dividends and use them to add to underweight or new positions at zero cost. This will take away adding to all stocks over time through reinvestment, but also frees me up to be fairly active with trades and will help keep me from selling off existing positions.
I think most of the hesitation comes from making a change after seven years and having to come up with a new way to report results. No longer reinvesting back into the company that pays it muddles up the total return picture and tracking the real results for each position. It will have a negative impact on returns for some stocks because I will no longer be adding to them but probably fits my personality better because it will let me make monthly buys on what I want.
Thoughts?
Go for it. I was only reinvest the dividends into the payers when I was paying commissions. Once it went to $0 commissions, I turned them all off. You'll still be tracking whether or not you get the 10% growth for the overall portfolio. While individual stocks most likely won't hit the 10% per year, the overall portfolio should still hit it. And now you won't have to trim positions just because you find a new stock that you want to add.
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No matter what you do, use DEC 31 as a closeout point for the rule change and future tracking. I would definitely pool my dividends. The justification for DRP is now in the past. I stopped dripping quite some time ago. You have decent income now and it be fun to pick where to put the next share.
Don't beat yourself up for rimming your winners. You are viewing it through bull market glasses. What if you had trimmed a stock like BA just before they started crashing jets, or tech stocks before a hard tech correction?. I would stick to my general rules. Div cutters no longer fit the criteria. You could trim slow growers too but that cuts back on some growthier stocks and the CAP appreciation you've benefitted more from than income growth.
Just have fun, whatever you decide. Build something that won't get crushed in a protracted stagnant economy.
Not really the same at all, but the growth outlook for very mature brands is.