Poll: What do you do with your dividends?
Automatically reinvest
Manually reinvest
Some of each
Neither -- I'm living off the income!
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Automatic vs Manual Dividend Reinvestment
D.M., yours is the healthy attitude to have IMO. DRIP is great for anyone who is trying to minimize time involved with managing the portfolio. But if a person would not buy more of the security today with fresh cash, then it makes no sense to buy via DRIP today. For me, cumulative dividends are best directed toward the best opportunity that arises, and Buffet would probably add, [to let the price come to the buyer] rather than buying just because the cash is available.

There are all kinds of strategies and styles, but for the life of me, I can't see buying a stock on a given day just because cash hits the pot, buying without regard to entry price.

As pointed out earlier, just watching the price action relative to the bollinger bands would save 5% more often than not.

Since August look at how many days QCOM could be bought at under $68.
[Image: z?s=QCOM&t=6m&q=l&l=on&z=l&a=v&p=b&lang=en-US&region=US]

And the same with Aflac, three or four nice opportunities to buy shares in the lower half of the trading range.
[Image: z?s=AFL&t=6m&q=l&l=on&z=l&a=v&p=b&lang=en-US&region=US]
(12-06-2013, 08:03 PM)Dividend Mantra Wrote: EricL,

That article was phenomenal. Some people find Chuck verbose, but I appreciate his talents.

I also selectively reinvest my dividends, rather than employing a DRIP. I hate the idea of buying an overvalued security with fresh capital, and hate the idea just as much with dividend income. Makes no difference to me.

I employ both strategies with my portfolios.

I have a 401k account with new money coming in monthly. I reinvest all of my dividends and use my fresh capital to add to positions that I feel are at good values. Recent buys include DLR and DE. I could see myself switching the reinvestment off down the road when the portfolio is larger, but right now as I am working to build capital I am comfortable letting my winners run and letting the compounding work.

In another account I have an old SEP plan that I converted from mutual funds over to a rollover account and invested the proceeds to higher yielding DG stocks. With this account I will accumulate the dividends and direct them into either an existing position or start a new one once I have enough.

Finally, in my smaller cash account I am also taking dividends as cash. This is mostly just to make the accounting easier when I go to sell and again to provide new capital for future purchases.

I really don't think you can go wrong either way. I don't think the end result will be significantly different either way, it just depends on an individual's preference and situation with each account.

By the way, love your blog. You are a great inspiration and your thoughts on keeping investments in a cash account for early retirement have gotten me to do some thinking on my future plans.

With a wife, kid, and another on the way, I can't match your savings rate. But we are nearly debt free other than the mortgage and I'm hoping by the second half of 2014 I can start plowing more funds into building up our retirement savings.

(12-06-2013, 08:36 PM)hendi_alex Wrote: As pointed out earlier, just watching the price action relative to the bollinger bands would save 5% more often than not.

Your posts on the bollinger bands are interesting. That's not really something I've looked at in the past before making purchases, but will have to start paying attention to in the future.

Thanks for sharing.

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