2007-10-16 05:00:42 · 7 answers · asked by Chris R 1 in Business & Finance ➔ Investing
This entirely depends on the potential of the business to increase its market value in the future compared to other investment options.
do you like the company and its ability to produce earnings over time?
do you like the future prospects of this company more than another company, relative to their respective current values?
2007-10-16 05:12:17 · answer #1 · answered by regankc 3 · 0⤊ 0⤋
Taranto is right. A rational thinker only needs to reinvest (by DRiP) as a default move to save on transaction costs and getting a discount price.
However, don't set up a DRiP on an over-valued stock, hold the cash until conditions get better. And if you already have a well diversified portfolio, buy a new business only when it's a much better deal than the lot you already have.
2007-10-16 05:48:01 · answer #2 · answered by bb4479 2 · 0⤊ 0⤋
Depends on the type of stock.
If it's a dividend grower you own for equity income - then it makes sense to reinvest to accumulate as many shares as possible.
If, on the other hand, it's a growth stock and the dividend is incidental, then take the cash - fractional shares will only give you a headache when you sell/do your taxes.
2007-10-16 05:23:32 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you can reinvest as part of a DRiP -- then you will usually buy new shares at a slight discount to the market price and save transactions costs.
If you later decide to invest in another stock, you can sell some of your shares & buy the new stock.
2007-10-16 05:09:34 · answer #4 · answered by Ranto 7 · 0⤊ 0⤋
Unless the co.runs a DRIP, you cannot reinvest the dividends into the same cos. as they are usually too small.
But even with DRIP, I do not advocate it as, when it comes to selling the the shares and calculating capital gains, you will have so much work, you will
wish you were not born.
2007-10-16 05:46:02 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Set up a DRIP to automatically re-invest. Exceptions: The investment is not a long term investment. Or you have a huge dollar value portfolio & you are a terrific trader.
2007-10-16 16:50:46 · answer #6 · answered by Tom H 4 · 0⤊ 0⤋
Reinvest in whatever you think will provide you with the best return, especially if you aren't looking into setting up a DRIP.
2007-10-16 05:06:12 · answer #7 · answered by Adam J 6 · 0⤊ 0⤋