Given that most brokerages have gone with no commission trading, I no longer find the benefit to reinvesting. I now choose where to deploy my dividends at opportune moments.
@@2B_or_not_2B well, that's true.. especially if your goal is buying more current income in a retirement acct., FI. But when it comes to TR in an account, it's extremely difficult over time to beat just staying auto invested/reinvested in stocks. That's why Buffet and Lynch are famous, they did it. Holding funds to reinvest at an "opportune" time is a second cousin to market timing, IMO.
@@land7776 waiting for an opportune time could mean a week or two. Doesn’t have to be some major crash. I think beating the market as an individual investor is easier than as a big hedge fund. I own a large number of stocks. I add to them as they drop and become better deals. I can do that better than my auto investing M1 account. However, that takes work and the willingness to put in a lot of time. Not everyone wants to do that so auto investing works best for them.
I am for it at times and against it at other times. Eg. If price hi, yield lo, I like cash distribution until price lo yield hi. I also note the swing in price and yields from record date, and pay out to the next date depending how the market is generally doing. However I am lazy so I generally keep it on dividend reinvestment. Now most important. It also depends on what kind of account. On a 401 k since tax free it is great for cyclical trading, but a regulate account would benefit more from dividend reinvestment and no short term trading. Now if the stock has a decent growth rate I will purchase a lot early on at a low price and reinvest too.
Great video my biggest dividend position is 2000 shares of AT&T don't do the auto reinvest because I like to see if another stock i have is trading lower so i can take advantage of the dips.
I never DRIP. I add dividends every month to my saved money and invest it together in the best deal available in that moment. Why I should DRIP Altria for example when it was very overvalued and than lost 60% of share price as the result. I could reinvest later once it got undervalued and buy double amount of shares compared to DRIPing. So DRIP why not but only if shares are fair value or better.
Thank you for this great explanation. I thought about this a lot. Should I use dividend to buy more of the stock paying it or not ? At the moment I mostly use dividend to buy whatever stock on my watchlist is on sale since I think that gives me the most bang for my buck but this doesn't reward the stock that pays me the dividend. Choices, choices haha
Thanks Chuck - your videos are always helpful but this one did not respond to my primary question regarding automatic dividend reinvestment. At times such as these when so many stocks are overvalued, are we best served to take the dividends and spend then on the undervalued stocks in our portfolio or purchasing new undervalued stocks? Then, perhaps turn on dividend reinvest when the markets are more reasonably valued or undervalued. Thoughts?
Jay: Thanks for the kind words. With all due respect I do believe this video answered your question. The principal of dollar cost averaging I discussed addresses your question. Nevertheless, with that said it is a choice. Personally, I never drip, instead I always collect and invest. However, to be fair to those that do like to drip, investing is my job and it is all that I do. Therefore, I have the time, the experience, the education, and of course the tools to do the job correctly. But most importantly, I have the desire. Either way works, it is up to you to choose which suit you best.
What a great video you made... I did not expect to see an "old" guy but some sort of "I know better at 22". But this turned out to be very valuable lesseon about dividends. Thank you so much! You sir, gained a subscriber and I am gonna watch some more videos of you now... Greetings from the Netherlands. 👍👍👍
Thanks Chuck! Aside from yield, I usually only reinvest when I feel the stock is under or reasonably valued. If I wouldn't buy the stock today, I won't drip into it. What are your thoughts on this approach?
Same here. I have an older IRA from a previous employer; so I don't pay into it. I just use the dividends it generates to buy more shares of companies I already own but are at a more attractive valuation. I don't auto-drip.
Is this why OHI jumped 5% today? How would reinvesting dividends look like on a monthly payer and would compounding be better over the same period of time?
Thanks for another enlightening video Chuck. And thanks for moving your chair away from the corner of the room. You now sound like Walter Cronkite ;-) I don’t drip my dividends for a reason no one has mentioned, and that is to avoid having a stock become too large a fraction of my total holdings. For example, I have positions in PM and MO that I consider large enough. I invest their dividends in stocks in which I have much smaller positions, but that I think have greater growth potential, like EPD, BMY, ABBV, AVGO, GILD, and others.
Thanks Chuck for the video, however I do have my concerns with the dividend automatic re-investment, specially with the examples that you mentioned in the video. The problem mainly is you are assuming I am either going to re-invest the div in the same stock or just keep it as cash for the entire period which of course no one would do. You are most likely going to re-invest this money in something else as soon as you get it (or better yet as soon as there is a good/better opportunity). The only argument was for div re-investment is you were saving the cost of the trade to buy stock and of course that is no longer the case where almost all brokers have free trades. You are paying taxes on the Div regardless of re-investment or cash so there is no tax benefit here. Personally, I keep all my div payments to cash and I use that money to balance my portfolio (or open newer ones that make more sense). I am not saying this is the silver bullet and everyone should do the same but I feel like you should have mentioned this in your video. After watching the video, all the examples were it was better to re-invest the div. There was no counter argument. Final note. 20yr time period is supppperr huge when looking at historical performance of the stock market. I know how experienced you are and I am grateful that you are sharing your wealth of experience but again, I feel like looking at the company 20yrs ago is somewhat miss leading because the markets are changing very quickly now, new managers, new trends, disruptive technologies.... it just paints a very different picture when you you look that long ago, Ex: MSFT today is not the same company it was 5yrs ago. looking at 20yrs history of MSFT stock is very misleading. Happy Easter everyone & stay safe!
Amr Momtaz: With all due respect I believe you are way of overthinking things. This video didn't assume anything it simply calculated what a dividend reinvestment process would have generated. In fact, I produce the results both ways. As far as whether to use an automatic dividend reinvestment plan or collect and invest, that's a decision that's up to the individual to decide for themselves. Furthermore, showing reinvesting dividends versus not reinvesting dividends in the same company have nothing to do with alternate choices. Obviously, the results will always be better if you reinvesting dividends because you are getting more stock by doing so. Once again, it is your choice to drip or to collect and invest. The 20 year timeframe is important because as I always say you can learn a great deal from the past. However, I also always say that you can only invest in the future. Nevertheless, you can tell a lot about how well the company is managed and how lucrative their businesses by examining the past record. looking at the past is never misleading because you are looking at factual information. on the other hand, we do agree that you can only invest in the future, that's why forecasting is so important I just did a video on that. Additionally, the math doesn't change. The growth the company generates going forward will determine his future value just as its historical growth determine its future value. It doesn't matter if it was the same company or not, it only matters what is the company can grow or not and most importantly how fast. the mathematical realities of specific growth rates never changes. 10% is always better than 5%, 20% is always better than 10% and so on and so forth. Regards, Chuck
Mr Chuck, FG has been so helpful for me as a new long term investor. I am brand new into all this and all your videos are so valuables. I found Levi stock will have report this next week, so i tryed to evaluate in FG, but I got confused because analyst fail 100%. I was expecting you could include this next Tuesday this stock for valuation with FG. I want to say Thanks for share all your knowledge with us, Carlos A!
Carlos: LEVI has only been listed on the New York Stock Exchange since 2019. Therefore, there is only one data point the year 2020 that is listed in the analyst scorecard. In other words, there really is no record there. And did miss estimates by slightly over 10% when they made the estimate one year forward. However, that was also the pandemic year so I wouldn't put much credence into that. Also, there were only 2 analysts so again not much to go on. With all that said, LEVI looks fully valued but not particularly overvalued. Unfortunately, I already have a video subject for this Tuesday. But I hope what I said here helps. Regards, Chuck
![BLACK BAG - Official Trailer [HD] - Only in Theaters March 14](http://i.ytimg.com/vi/Du0Xp8WX_7I/mqdefault.jpg)
I drip nearly all of my dividends. Maybe not the best approach to maximize total return, but it takes our emotion out of the equation.
Some of my companies don't allow reinvesting but otherwise it builds without you noticing when using drip All my stocks pay dividends
Given that most brokerages have gone with no commission trading, I no longer find the benefit to reinvesting. I now choose where to deploy my dividends at opportune moments.
What he said.
that's fine as long as your opportune moments can beat an index, or DCA over time.. very hard to do..
@@land7776 there's always something on a discount!
@@2B_or_not_2B well, that's true.. especially if your goal is buying more current income in a retirement acct., FI. But when it comes to TR in an account, it's extremely difficult over time to beat just staying auto invested/reinvested in stocks. That's why Buffet and Lynch are famous, they did it. Holding funds to reinvest at an "opportune" time is a second cousin to market timing, IMO.
@@land7776 waiting for an opportune time could mean a week or two. Doesn’t have to be some major crash. I think beating the market as an individual investor is easier than as a big hedge fund. I own a large number of stocks. I add to them as they drop and become better deals. I can do that better than my auto investing M1 account. However, that takes work and the willingness to put in a lot of time. Not everyone wants to do that so auto investing works best for them.
Chuck is the Ol G of investing! Great video!
I auto DRIP only on a case by case basis. I will take dividends from on and invest in another if I don't auto DRIP. Thanks again Chuck!
I use my divs for living good, awesome video !
I am for it at times and against it at other times. Eg. If price hi, yield lo, I like cash distribution until price lo yield hi. I also note the swing in price and yields from record date, and pay out to the next date depending how the market is generally doing. However I am lazy so I generally keep it on dividend reinvestment. Now most important. It also depends on what kind of account. On a 401 k since tax free it is great for cyclical trading, but a regulate account would benefit more from dividend reinvestment and no short term trading. Now if the stock has a decent growth rate I will purchase a lot early on at a low price and reinvest too.
Love Fastgraphs, I like the dividend reinvested check box. Now for the ultimate feature reinvested dividends minus fill in tax rate
Love seeing my dividends coming in!
i collect and invest myself
Same. I reinvest when I choose the buy in prices.
@@jenniferwise8515 I find it to be the most enjoyable way of investing. Every month I'm hunting for new deals to reinvest my dividends into!
I like DRIP. more shares means more dividends which means more shares and more dividends etc repeat
yep, it's like keeping the compounding locomotive rolling instead of stopping to collect fares.
@@land7776 I like that. I’m gonna use it!
Hi Chuck, this video has great examples of potential outcomes. I really appreciate the time you spend generating content on this channel.
Great video sir!!! Keep up the good work!
Good info Thanks much and the audio is much improved. ;-)
Great video my biggest dividend position is 2000 shares of AT&T don't do the auto reinvest because I like to see if another stock i have is trading lower so i can take advantage of the dips.
Chuck! Thanks for content.
I am working through using this tool. So far, so good. Thank you for all your help!
I never DRIP. I add dividends every month to my saved money and invest it together in the best deal available in that moment. Why I should DRIP Altria for example when it was very overvalued and than lost 60% of share price as the result. I could reinvest later once it got undervalued and buy double amount of shares compared to DRIPing. So DRIP why not but only if shares are fair value or better.
Same here, basically.
Thanks Chuck !! Happy Easter as well !! ... Chuck will you cover banks / FI for this Tuesday?
Thank you for this great explanation. I thought about this a lot. Should I use dividend to buy more of the stock paying it or not ? At the moment I mostly use dividend to buy whatever stock on my watchlist is on sale since I think that gives me the most bang for my buck but this doesn't reward the stock that pays me the dividend. Choices, choices haha
Thanks Chuck - your videos are always helpful but this one did not respond to my primary question regarding automatic dividend reinvestment. At times such as these when so many stocks are overvalued, are we best served to take the dividends and spend then on the undervalued stocks in our portfolio or purchasing new undervalued stocks? Then, perhaps turn on dividend reinvest when the markets are more reasonably valued or undervalued. Thoughts?
Jay: Thanks for the kind words. With all due respect I do believe this video answered your question. The principal of dollar cost averaging I discussed addresses your question. Nevertheless, with that said it is a choice. Personally, I never drip, instead I always collect and invest. However, to be fair to those that do like to drip, investing is my job and it is all that I do. Therefore, I have the time, the experience, the education, and of course the tools to do the job correctly. But most importantly, I have the desire. Either way works, it is up to you to choose which suit you best.
What a great video you made... I did not expect to see an "old" guy but some sort of "I know better at 22". But this turned out to be very valuable lesseon about dividends. Thank you so much! You sir, gained a subscriber and I am gonna watch some more videos of you now... Greetings from the Netherlands. 👍👍👍
Thanks Chuck! Aside from yield, I usually only reinvest when I feel the stock is under or reasonably valued. If I wouldn't buy the stock today, I won't drip into it. What are your thoughts on this approach?
Same here. I have an older IRA from a previous employer; so I don't pay into it. I just use the dividends it generates to buy more shares of companies I already own but are at a more attractive valuation. I don't auto-drip.
Is this why OHI jumped 5% today? How would reinvesting dividends look like on a monthly payer and would compounding be better over the same period of time?
I think that investing in monthly payers accelerates compounding.
Food for thought.
Thanks for another enlightening video Chuck. And thanks for moving your chair away from the corner of the room. You now sound like Walter Cronkite ;-)
I don’t drip my dividends for a reason no one has mentioned, and that is to avoid having a stock become too large a fraction of my total holdings. For example, I have positions in PM and MO that I consider large enough. I invest their dividends in stocks in which I have much smaller positions, but that I think have greater growth potential, like EPD, BMY, ABBV, AVGO, GILD, and others.
@@bryanhughes3954 Is this legit or has FAST graphs been hacked?
@@leopfeffer2419 when the owner of the site name is NOT highlighted it is FAKE. A scammer replied to you.
@@jenniferwise8515 Thank you for pointing that out. I never noticed it before.
I just treat my divys like any other cash I have.. I look for appropriate ways to invest it no matter the company
Thank u
Thanks Chuck for the video, however I do have my concerns with the dividend automatic re-investment, specially with the examples that you mentioned in the video. The problem mainly is you are assuming I am either going to re-invest the div in the same stock or just keep it as cash for the entire period which of course no one would do.
You are most likely going to re-invest this money in something else as soon as you get it (or better yet as soon as there is a good/better opportunity). The only argument was for div re-investment is you were saving the cost of the trade to buy stock and of course that is no longer the case where almost all brokers have free trades. You are paying taxes on the Div regardless of re-investment or cash so there is no tax benefit here.
Personally, I keep all my div payments to cash and I use that money to balance my portfolio (or open newer ones that make more sense). I am not saying this is the silver bullet and everyone should do the same but I feel like you should have mentioned this in your video. After watching the video, all the examples were it was better to re-invest the div. There was no counter argument.
Final note. 20yr time period is supppperr huge when looking at historical performance of the stock market. I know how experienced you are and I am grateful that you are sharing your wealth of experience but again, I feel like looking at the company 20yrs ago is somewhat miss leading because the markets are changing very quickly now, new managers, new trends, disruptive technologies.... it just paints a very different picture when you you look that long ago, Ex: MSFT today is not the same company it was 5yrs ago. looking at 20yrs history of MSFT stock is very misleading.
Happy Easter everyone & stay safe!
Amr Momtaz: With all due respect I believe you are way of overthinking things. This video didn't assume anything it simply calculated what a dividend reinvestment process would have generated. In fact, I produce the results both ways. As far as whether to use an automatic dividend reinvestment plan or collect and invest, that's a decision that's up to the individual to decide for themselves.
Furthermore, showing reinvesting dividends versus not reinvesting dividends in the same company have nothing to do with alternate choices. Obviously, the results will always be better if you reinvesting dividends because you are getting more stock by doing so. Once again, it is your choice to drip or to collect and invest.
The 20 year timeframe is important because as I always say you can learn a great deal from the past. However, I also always say that you can only invest in the future. Nevertheless, you can tell a lot about how well the company is managed and how lucrative their businesses by examining the past record. looking at the past is never misleading because you are looking at factual information. on the other hand, we do agree that you can only invest in the future, that's why forecasting is so important I just did a video on that.
Additionally, the math doesn't change. The growth the company generates going forward will determine his future value just as its historical growth determine its future value. It doesn't matter if it was the same company or not, it only matters what is the company can grow or not and most importantly how fast. the mathematical realities of specific growth rates never changes. 10% is always better than 5%, 20% is always better than 10% and so on and so forth.
Regards,
Chuck
I drip based on 2 criteria:
1) what's the tax liability if I don't drip?
2) is the stock at or below fair value?
Is it wise to reinvest dividend in a brokerage account
Reinvesting dividends automatically takes advantage of the principle of dollar cost averaging. It is a disciplined approach and therefore also wise.
Dividend reinvesting = increasing your ownership & hopefully income if the company has a durable competitive advantage
Thanks for this analysis, some food for thought
I like to drip my dividends.
Thanks
I reinvest my dividends if I would not reinvest them back in the company then don’t buy the company.
EPD=dividend treasure
Epic video and breakdown by the goat 🐐 Mr. Valuation 👍🏼👏🙌🏽🙏🏼❤️💪🏽 Total logic and wisdom.
Mr Chuck, FG has been so helpful for me as a new long term investor. I am brand new into all this and all your videos are so valuables. I found Levi stock will have report this next week, so i tryed to evaluate in FG, but I got confused because analyst fail 100%. I was expecting you could include this next Tuesday this stock for valuation with FG. I want to say Thanks for share all your knowledge with us, Carlos A!
Carlos: LEVI has only been listed on the New York Stock Exchange since 2019. Therefore, there is only one data point the year 2020 that is listed in the analyst scorecard. In other words, there really is no record there. And did miss estimates by slightly over 10% when they made the estimate one year forward. However, that was also the pandemic year so I wouldn't put much credence into that. Also, there were only 2 analysts so again not much to go on.
With all that said, LEVI looks fully valued but not particularly overvalued. Unfortunately, I already have a video subject for this Tuesday. But I hope what I said here helps. Regards, Chuck
Mr. Chuck absolutely help me a lot, I learn everyday, Thanks a lot!!!
So if I put $10,000 in EPD, after 3 months I would have $67,000??
Yes
@@Abraham.Lincoln22 You gotta be kidding me? Why wouldn't everyone do this??
It's a span of 20 years
@@gerardos256 20 years? I'll be 78 years old!! No hope for me.
One technical analysis forex trader dislike the video 😂
Riet WP CARY has growth and high dividend