Treatment of dividends

[OLTB]

Afternoon all

In this rather exciting market, I am unsure if my current strategy with dividends is the most appropriate.

At the moment my dividends build up in my SIPP cash account and I then too-up a single holding usually once a month (either an IT, passive or HYP constituent).

I’m just wondering if this is the best strategy in the current market with so many holdings cheaper than they were a few weeks ago. I am thinking of changing to automatic reinvestment of dividends into the same holdings from where they are generated as the holdings are practically in the correct asset allocation to how I want them.

Any comments would be appreciated.

Cheers, OLTB.

[kempiejon]

Fewer trades mean smaller charges, though with cheap dealing days £1.50/£2 barely moves my dials. If you wait prices might be even cheaper so let a month's worth accumulate. If the markets rebound quickly you've missed an opportunity. What do any of us know?

[tjh290633]

I prefer to use my own method to decide where to reinvest dividends. Reinvesting whence they came does not meet my personal objective of maximising dividend income. If your own objective is to maximise total return, then you may be doing the right thing. At times, my method can also achieve that objective more effectively, but we can only judge that in retrospect.

TJH

[Dod101]

Afternoon all

In this rather exciting market, I am unsure if my current strategy with dividends is the most appropriate.

At the moment my dividends build up in my SIPP cash account and I then too-up a single holding usually once a month (either an IT, passive or HYP constituent).

I’m just wondering if this is the best strategy in the current market with so many holdings cheaper than they were a few weeks ago. I am thinking of changing to automatic reinvestment of dividends into the same holdings from where they are generated as the holdings are practically in the correct asset allocation to how I want them.

Any comments would be appreciated.

Cheers, OLTB.

When I was in your position, I just left dividends to be reinvested in the same share from whence they came. Some brokers will accumulate these until there is an amount worth investing but in principle that was the easy and painless way to reinvest. No one can time the market, as those who bought in the early days of this downturn will attest.

Dod