This question doesn’t really apply to DRIP investors. But for those that take dividends in cash:
Curious what everyone is doing on this. Back in the day there were fees per trade and so to minimize friction costs, it made sense to save up a certain amount of money before buying more shares to keep the fees down to an acceptable percentage, maybe 1 to 3%.
But, now, with no fees at all on buy’s (and only the SEC fee on sales), there is no reason not to invest dividends almost as they come in.
I haven’t really had a rule of thumb that I follow, but do you have comments regarding this? What do you do? Buy a few shares at a time as dividends role in or save up until you can make a more substantial purchase?
I still DRIP. If I don’t, I find that I end up with cash sitting in an account for an extended period of time with little awareness of it - and even though there may not be a fee to buy, there is still a “small lot” cost/spread involved in trying to purchase less than 100 shares.
I DRIP my smaller positions that I would like to build bigger. I have some that I’m overweight in so I use those dividends to build up smaller positions or hold to take advantage of big drops.
What broker are you using that still charges odd-lot fees?
I haven’t had odd-lot fees since the early 1990’s, late 1991 maybe (?).
In March 2020 when I was plunging every cent in our brokerage accounts into the melee, I was buying odd-lots. In our taxable account, I put in a purchase and it hit low enough that I bought a single share a few minutes later, leaving less than $1 in the account.
As far as dividends go …
I generally let my dividends drop as cash rather than using auto-reinvest.
As far as DRIP goes, I haven’t had a DRIP account since the mid 1990’s when I closed them all and transferred the shares to our taxable brokerage account. Too many accounts and statements.