Dividend investing is intentionally including the concept that a company actively considers the dividend as part of their annual bills or responsibilities. Some dividend investors looking for consistency while others are looking for growth. Personally, I prefer companies who have increased their dividend over multiple economic conditions.
Earlier this year, I declared that I was finished with automatic dividend reinvestments, but I am here to admit, for me, that was a mistake. My very logical thought process was that if I wouldn’t deploy new capital into stocks that do not pass my screen for undervalued dividend investments why let paid dividends buy “overvalued” shares regardless of how small the amount. When making the decision in March I stated the one very foreseeable risk would be,
to remember that the reinvestment of dividends is not part of my monthly contributions to the account. If I am putting away $500 a month into the account every month I have to make sure that the dividends are on top of those purchases. I don’t think it’ll be too difficult to just add whatever I received in the month before into the next purchase.
In the 5 months or so since writing that post, I did not consciously take into account my received dividends – Not Even the First Month After Writing the Post! Well, since knowing thyself is the first step in personal finance I have turned on all dividend reinvestments. My guess is that 45 year old Evan (as opposed to 33 year old Evan) will be pumped I made this decision.