09-04-2019, 07:41 PM
When I was just starting out, and my portfolio was relatively small, I just reinvested all dividends back into the companies that paid them. This was simplest, and made sense to me as the best way to build momentum -- that is, to grow the size of the snowball as it started rolling downhill. When you're only collecting a hundred or three dollars in dividends each month, it would take forever to pool them up to make a separate purchase. I understand that this may not be optimal in terms of entry prices at the time each dividend is paid, but it was simple, predictable, and helped the portfolio grow visibly quarter after quarter.
Now that my portfolio is larger, however, and throwing out more than a thousand each month in dividends, I generally pool them up and make separate new purchases with the proceeds. When a company that I like a lot is trading in a good price range, I sometimes just click the "automatic reinvest" box (I was doing that with T for a while a year or two ago, and am doing it with MO and PM now), but mostly I let the dividends pile up and reinvest opportunistically.
I've never been a believer in the "ex-div drop," and have never factored it into my decision-making.
Now that my portfolio is larger, however, and throwing out more than a thousand each month in dividends, I generally pool them up and make separate new purchases with the proceeds. When a company that I like a lot is trading in a good price range, I sometimes just click the "automatic reinvest" box (I was doing that with T for a while a year or two ago, and am doing it with MO and PM now), but mostly I let the dividends pile up and reinvest opportunistically.
I've never been a believer in the "ex-div drop," and have never factored it into my decision-making.