08-20-2014, 04:16 PM
(08-20-2014, 01:16 PM)EricL Wrote: Both Sharebuilder and Schwab offer free partial share reinvestment of dividends. I'm surprised to hear that there are brokers that require full shares be purchased.
I believe that is ScottTrade. I don't think they charge a commission on it but I don't have an account there.
For me, I'd rather just let the brokerage reinvest whatever I get back into the company. I'm not particularly worried about the price -- 10 years down the road I'm not so sure it will make a difference price-wise. The income change coming from it is noticeable even with a slow grower like T.
For someone starting out with a small account, like my wife, it would take a month or more to collect enough dividends that would cover 1 share of something like UTX or GWW. If we saved all the dividends, it may take almost a year to purchase another position of around $1000 to keep transaction costs low. So, we DRIP the conventional way.
I think you need to do what makes sense to you and your circumstances. Neither is a bad way.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan