08-27-2014, 06:27 AM
(08-26-2014, 01:40 PM)TomK Wrote: My own example would be MO. I still think that MO is a buy at today's prices, and so I am glad that I've been reinvesting for the past several years, even as the price has gone up from my original buy-in amount.
That is exactly the point.
If you are happy with the stock price and if you still consider it a "buy" price than you should use DRIP to negate the commissions impact.
In most cases however the dividend amount can be better allocated elsewhere to another stock with a better buy price than your current holding.
To each his own but automating everything without thinking about it is more often wrong than right.
There are and always be exceptions, like your MO example, but can
you say the same for every other company in your portfolio?
In my opinion, DRIP is great if (and only if) I will consider buying that company in case I didn't already had some shares of it at the current price.
In most cases I won't be buying shares on their market value and always try to get a lower rate using OCO (one-cancel-other) limit orders between 2 stocks that I like (in my IRA account where I can't sell puts) or selling puts (in my margin account).
I do realize that if I "timed the bottom" than I won't get the shares and they will go to the moon without me.
It's my opinion that I'll time the bottom less often than not so I acknowledge that drawback and sleep well at night.
I'm just the kind of person who likes to take control of things and not let others dictate what happens (DRIP dictates which price I buy).