Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

Stock dividends?

I'm new to stock market investing. I own stocks from companies that give dividends. What is better: to request that dividends be paid to me in cash, or to reinvest those dividends back into stocks?

How do I strategically make the best choice? What are the pros & cons of each choice?

Update:

If I get a dividend and choose to reinvest it, does it mean that a I will purchase a share at that current market value, or will a share be given to me at the value that the stock had at the time of my original purchase a few months ago?

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  • 1 month ago
    Favorite Answer

    <<<What is better: to request that dividends be paid to me in cash, or to reinvest those dividends back into stocks?>>>

    It depends upon your situation.  My grandmother lived for many years of the income she received from dividends. Obviously it was better for her to take the dividends in cash.

    For someone working and building a portfolio for retirement reinvesting the dividends is probably a better choice.

    <<<How do I strategically make the best choice? What are the pros & cons of each choice?>>>

    Determine your goals and decide which alternative best helps you meet those goals.

    <<<If I get a dividend and choose to reinvest it, does it mean that a I will purchase a share at that current market value, or will a share be given to me at the value that the stock had at the time of my original purchase a few months ago?>>>

    You will purchase shares at the current market value.

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    Don't forget the alternative of having the dividends accumulate in your brokerage account and then using the funds to purchase shares of companies that will better diversify your portfolio. 

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  • Erik
    Lv 7
    1 month ago

    Personally I would rather have the cash put into my investment account.  Because I would hate to own 100 shares of a stock, and after reinvesting owning 101.18 shares or something ridiculous like that.  That would really bug me.

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  • kswck2
    Lv 7
    1 month ago

    For an amateur investor, dividends don't pay enough to be 'worthwhile' to take as cash. So Reinvest them. Over time, they will become Very valuable. 

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