03-14-2020, 09:02 PM
The fractional shares will add up. Even starting late, your highest yielding stocks will compound one share from year one into about four shares. Just a round number for a stock that yields 7%. The initial yield and growth of the dividend over the years makes a huge difference of course.
Make sure you keep good tax records if this is a taxable account. Hopefully your broker provides good documentation. Early on mine did not. You can add the fractional shares to your cost basis. You already paid taxes on the dividends so you want to add the REINV DIV to your cost. That first share will have 80 more small quarterly purchases after 20 years. Without records you technically would pay a lot of taxes on that one share when you sell it. This is also a good reason to not keep one share for 20 years. It will turn into too much work someday. Especially if you hold a crazy amount of stocks before your total account justifies it. Ten quality stocks would be sufficient for the amount of money you said you are investing currently.
Make sure you keep good tax records if this is a taxable account. Hopefully your broker provides good documentation. Early on mine did not. You can add the fractional shares to your cost basis. You already paid taxes on the dividends so you want to add the REINV DIV to your cost. That first share will have 80 more small quarterly purchases after 20 years. Without records you technically would pay a lot of taxes on that one share when you sell it. This is also a good reason to not keep one share for 20 years. It will turn into too much work someday. Especially if you hold a crazy amount of stocks before your total account justifies it. Ten quality stocks would be sufficient for the amount of money you said you are investing currently.