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Author: Prospero13 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 50184  
Subject: Re: Scottrade DRiP to Become Reality Date: 1/26/2013 7:35 PM
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I disagree, reallyalldone. While Scottrade won't make money from implementing DRIPs, they will retain and attract the customers who want that feature. That was the main reason I left them. Otherwise, I was perfectly happy with them.

Most people aren't going to receive enough dividends from their holdings to reinvest manually, so the money will just be sitting there earning little to nothing in interest. While it may seem minuscule, those reinvested dividends will compound over time. I think it's even more relevant to DRIP in tax-sheltered accounts like IRAs since you're limited to the amount of money you can contribute every year and you don't need to report the cost basis to the IRS. It only makes sense to keep your commissions as low as possible--preferably no more than 2% of the capital you're investing. Once your holdings are spitting out enough cash so you can do that 3 or 4 times a year, it makes more sense to stop the DRIPs and reinvest those dividends in more timely investments.
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