For the few individual shares I have, I reinvest if I can.
However, as most of my dividend paying stocks are investment trusts, I check first to see if the investment trust which has just paid the dividend is on a discount or premium. If a discount, I reinvest. If premium, I’d then look to see which of my other investment trusts are on a discount and top up there instead.
Example, I recently got a dividend from European Assets Trust (EAT).
I checked whether premium or discount and it was the latter so I reinvested:
My answer is similar to weenie although probably not as competently. Thank you weenie for highlighting the premium/discount here as I always have trouble remembering it.
When I get dividends into my account, I simply regard them as cash to invest into whatever seems to me to be the best I can invest in at that time. That might be one with an upcoming ex-dividend date or one where I think it’s good value in the long run. Where the cash has come from doesn’t feature in my thought process.
Thanks @rehpot - although I was aware of Z scores, I’ve never used them when selecting investments. Something to consider in any case for my next purchase, cheers.
No worries. I think Z-scores are a handy guide but they do have limitations. They don’t tell you anything about the future, for example, nor the reasons for a widening discount.
You don’t want to wind up watering the weeds rather than pulling 'em up!
This is pretty much me. The value of the dividend does factor though, and will dictate which shares I am able to buy.
eg - a dividend of 0.60p isn’t going to buy me much, and an accumulated dividend pile of £2.50 has limited purchase power!
True, but enough of them coming in at the same time gives you a good amount of purchasing power. The small amounts below (ok, £11 is quite decent) total almost £28!
Also, I’ve started targeting stocks in the £1 to £3 range exactly because of the fact that many of my dividends aren’t huge yet, stocks such as Legal & General. There are also several investment trusts within that price range. Once the regular dividend snowballs start to gather serious amounts, I might add to my more expensive stocks such as British American Tobacco.
This is why I put any dividends under £10 into Gladstone as you can buy fractional and get a monthly dividend from them.
Anything over £10 I put into what looks good at the time.
Being able to buy fractional stocks like Gladstone is handy and I did hold these for a while but didn’t like paying the withholding tax on my dividends.
I did look at it because I think it’s a monthly dividend payer but that’s why I didn’t in the end. I basically only stick to UK stocks for that reason although I try to diversify via the likes of iShares S&P500 based on the $ without actually being subject to any US taxes.
Hopefully FT finally sort out the withholding tax on SIPP as it is crazy to not offer this when others do but still I like the stock and the dividend is monthly and quite high/reliable so, to me, covers the tax.
On the date a stock goes Ex-Div FreeTrade knows who holds what at the end of that day.
On this basis, a temporary schedule of what is due can be generated on that date meaning only a reconciliation is needed on receipt of funds for client allocations etc rather than waiting for receipt of funds before commencing processing.
This could potentially be extended further to the creation of an unposted batch in the Accounting sytem that once reconciled just needs the posting to be confirmed. No actual posting to occur on the day the funds are received.
Ahh sweet usally dividents drop in recession times so its good yours are up, if that is up because they increased % and not you increased the portfolio with said companies.
It doesn’t really matter to me that they’re up because of increased %, or the portfolio with said companies has increased - all the dividends are getting reinvested so the compounding is just all one thing to me.
[edit - I looked at my numbers and it’s a combination of both]
