Is it a good idea to reinvest dividends?

Asked 4 years ago

I have invested in a fair amount of dividend-paying stocks, and I'm wondering if it would be a good trading strategy to reinvest them and build up my portfolio that way?

Automatic dividend reinvestment Dividend investing Capital increase

Andrew Moran

Monday, October 18, 2021

If you are investing in these dividend-paying stocks for the long-term, it would be a good idea to reinvest the dividends.
Of course, it also depends on how much you own. If you possess a few shares, earning you $5 each quarter, you might as well transfer the funds to a savings account or buy fractional shares of expensive stocks you have been watching.
That said, if you own a large number of shares in these types of investment securities, you should sign up for a dividend reinvestment plan (DRIP). This allows you to reinvest cash dividends into additional shares.