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Author: dhd101 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6730  
Subject: dividends Date: 11/19/2012 5:29 PM
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I'm a new fool and recently setup my broker accounts and begun a portfolio of dividend paying stocks. I have elected to reinvest dividends, but is it better to have them put into the sweep account for possible use in other investments?
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Author: culcha Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6653 of 6730
Subject: Re: dividends Date: 11/20/2012 11:42 AM
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I'm a new fool and recently setup my broker accounts and begun a portfolio of dividend paying stocks. I have elected to reinvest dividends, but is it better to have them put into the sweep account for possible use in other investments?

I think different Fools do different things here. What I myself do is let the dividends accrue to the sweep account, and then when I decide to make my next purchase, I add in the amount of money that has been paid into the account by dividends.

The reason is that I can't say that the date on which company X pays their dividend will be a good time to put more money into that company. So, I let the money sit until I determine that putting money into company Y is a good thing -- and then I include that money in the purchase amount for company Y.

culcha

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6654 of 6730
Subject: Re: dividends Date: 11/20/2012 2:06 PM
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It's a matter of personal preference. The primary reason to reinvest dividends is to "painlessly" grow your investment in a company.
OTOH I think the following considerations point out some downsides to dividend reinvestment.
In a taxable account it creates a number of purchase lots which may make for a more complex tax return when you sell some or all of an investment.
Putting the dividends into a sweep account allows you to make your purchase to whatever investment and at whenever time you choose rather than being tied to a specific stock on the dividend date.

Bob

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Author: bhughes1001 Three stars, 500 posts Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6656 of 6730
Subject: Re: dividends Date: 11/23/2012 10:53 PM
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I think it depends on the amount of the dividends. If your portfolio is fairly small at this time, reinvest them. If your total dividends are enough to allow you to purchase a position every quarter or so with less than 2% commission,let them accumulate.

BH

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