11-26-2013, 09:57 PM
I'm more of the same opinion of your initial view on reinvestment. Cash dividends produced by your initial invested capital are part of your returns and should be counted as such.
Just as buying shares in a company that does not pay dividends but rather reinvests capital in growing the business or makes stock buybacks to grow EPS for shareholders, I look at reinvested dividends kind of the same way. If I make the initial decision to spend money on a dividend paying stock, everything that stock produces is part of the return, whether its capital gains, dividends, or extra shares.
Just as buying shares in a company that does not pay dividends but rather reinvests capital in growing the business or makes stock buybacks to grow EPS for shareholders, I look at reinvested dividends kind of the same way. If I make the initial decision to spend money on a dividend paying stock, everything that stock produces is part of the return, whether its capital gains, dividends, or extra shares.