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Strategies & Market Trends : Dividend investing for retirement

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To: chowder who wrote (6525)	11/19/2010 10:18:11 AM
From: gregor	Read Replies (1) of 34328

>>I think I'm going to stir up some trouble! ... :o)<< The first thing that comes to mind is that by reinvesting in this manner you will save trading commissions ( or will you, i.e. don't know if my broker, which is Fidelity charges for these purchases ). Two other things come to mind. First. Stocks usually fall after ex-dividend dates, however the actual cash will hit your account 2 or 3 weeks after the ex-dividend date, so the actual purchases will take place at those times. You'd think that the stock prices will have recovered by those times so you will be buying after the stock prices have recovered from the predictable ex-dividend adjustment, or at higher prices. Second. The reinvested shares will have to wait another 3 months to receive another dividend whereby if you reinvest in other stocks that will be paying dividends sooner the power of compounding will be accelerated and isn't the whole concept behind dividend paying stocks maximizing the power of compounding. Just some thoughts...( not meant to be critical just to stimulate some healthy discussion )

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