To DRIP or not to DRIP?

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justsomeguy2018
Posts: 735
Joined: Wed Oct 03, 2018 8:11 pm

To DRIP or not to DRIP?

Post by justsomeguy2018 » Thu Feb 13, 2020 11:00 pm

Is it better to reinvest stock fund dividends/bond fund yields and buy fractional shares of the underlying fund or let the dividend payments accumulate in the holding fund as cash (and if so then what do you do with the cash??)? Let's assume tax loss harvesting is not really in the picture to complicate things.

Silk McCue
Posts: 4172
Joined: Thu Feb 25, 2016 7:11 pm

Re: To DRIP or not to DRIP?

Post by Silk McCue » Fri Feb 14, 2020 7:56 am

You are quite prolific at asking questions and then in a large number of those posts not returning to reply. That is bad form.

Most of these questions are for well worn topics. I would suggest that if you are truly seeking to learn that using the Google search box on this page will be much more efficient (type in DRIP for this one) . That's how I have learned here along with utilizing Wiki pages, resources linked off of the main page, and reading recommended books.

Cheers

Topic Author
justsomeguy2018
Posts: 735
Joined: Wed Oct 03, 2018 8:11 pm

Re: To DRIP or not to DRIP?

Post by justsomeguy2018 » Sat Mar 07, 2020 10:16 pm

I've searched through the DRIP posts on this and am still unsure whether it is better to DRIP or not DRIP.

Hyperchicken
Posts: 175
Joined: Mon Mar 02, 2020 5:33 pm

Re: To DRIP or not to DRIP?

Post by Hyperchicken » Sat Mar 07, 2020 10:21 pm

This is not a universal yes or no question, or else everyone would be doing that, or no one would be doing that.

FWIW I'm keeping my dividends reinvested in tax advantaged accounts, and turn reinvesting off in taxable, to avoid having a lot of tiny lots.

HomeStretch
Posts: 4017
Joined: Thu Dec 27, 2018 3:06 pm

Re: To DRIP or not to DRIP?

Post by HomeStretch » Sat Mar 07, 2020 10:33 pm

if you are talking about a true Dividend Reinvestment Plan (DRIP) offered by a company through its Transfer Agent, I am not a fan for two reasons:
(1) some companies do not offer no-fee DRIPs which then charge investors a fee for reinvesting dividends, and
(2) when transferring DRIP shares from the TA to a brokerage firm, TA’s will usually not transfer DRIP fractional shares and charge high fees to sell the fractional share.

If you are talking about simply setting your brokerage account to automatically reinvest dividends and capital gains, that’s a personal choice. I prefer not to do this in a Taxable account to avoid numerous small tax lots.

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