absolutezero wrote:
As yet, nobody has actually answered the question.
5p in dividend comes from 5p of the share capital that you owned before XD day. It's 5p of your own money.
All that's happened is that the share's value has fallen by 5p and you have 95p of share and 5 p in cash.
What's the difference if that 5p is held within the share or as cash that you then reinvest?
Because by doing nothing, a granular income-stream has been developed, which can be measured and tracked, and then over the long term, and along with all the other 'do nothing' granular income streams, the overall portfolio income can ultimately be judged against any underlying, and eventual, income requirements over a long period, and often covering a number of market cycles, thus delivering confidence in it...
That cannot be done in the same way if it's not originally delivered 'task free', and stays within the company capital.
There might well be some level of re-investment process required whilst not needing to take that income stream, but those tasks are often used for portfolio management opportunities anyway, during that phase of investment, and can be opportunities for things like diversifying into other investments, or managing developing portfolio imbalances over longer periods...
Cheers,
Itsallaguess