2007-01-24 07:16:45 · 7 answers · asked by sweet 1 in Business & Finance ➔ Investing
Income needs and diversification are good answers that have already been mentioned. In addition, if your investment is in a taxable account (i.e. non-IRA) that you actively trade, you may not want automatic reinvesment of dividends to better manage the gains/losses from a tax perspective and to simplify record-keeping.
By using a DRIP, you will accumulate many small positions of the stock over time at various prices which can be a challenge to keep track of. If you sell some of the stock, you will need very good records to know which lots were sold, when they were acquired, and at what price they were purchased. Depending on the various acquisition dates, part of the sale may qualify as short-term gains/losses while another may qualify as long-term for tax purposes. And if the DRIP purchases the stock within +/-30 days after/before a sale, any losses that you were counting on for tax purposes will be disallowed.
2007-01-24 09:30:07 · answer #1 · answered by Ian 3 · 0⤊ 0⤋
Reinvesting dividends for you means extra work for them. Extra work means extra costs. They seem to make enough profit without offering this service. T. Rowe Price and Vanguard both have brokerage arms that will reinvesting stock dividends for you. Also look at Charles Schwab.
2016-05-24 04:57:54 · answer #2 · answered by Michelle 4 · 0⤊ 0⤋
Many people DO automatically re-invest ( called a DRIP plan)... but just like everything else in life , people have different outlooks on things...some may want to save up some divvys and look for something else to add to their investments...some people even use their dividend money as their " social security" or retirement income... everybody has a diff lifestyle, that's all.
2007-01-24 08:21:36 · answer #3 · answered by jebediabartlett 6 · 0⤊ 0⤋
Many people buy dividend yielding stocks for the income. Which is why utility and telecom stocks are often called "widow and orphan" stocks.
2007-01-24 07:23:24 · answer #4 · answered by Anonymous · 2⤊ 0⤋
I always reinvest dividends...Unless you need the money, just reinvest them.
2007-01-24 07:36:28 · answer #5 · answered by Anonymous · 0⤊ 0⤋
1) Yes.
2) Some people need money to buy food, clothes, college...
2007-01-24 11:01:51 · answer #6 · answered by Anonymous · 0⤊ 1⤋
Diversification!!!
You do not want "all of your eggs in 1 basket".
2007-01-24 07:24:26 · answer #7 · answered by jetero41 3 · 0⤊ 0⤋