October 2018 Dividend Income: To DRIP or Not to DRIP

I have a list of future blog titles for this particular series.  They aren't set up for specific months, rather for buying certain companies or hitting certain milestones.  The title for this very post was included among them.  Come to find out that it's already taken.  I suppose it's a common enough concept for a title, but it's still vexing.

In any event, as noted in last month's report, there wasn't any apparent QoQ growth.  The same three companies that paid me then paid me the same amount now.

Best Buy: $3.15
Armanino: $0.14
Barnes and Noble: $2.85

For a total of $6.14.

I said before that there was no apparent growth.  Thankfully, my 401K paid me $.07 this month, bringing the total up to $6.21.  It isn't huge growth, but I'll take it, regardless.

As far as interest income goes, this month brought in $1.10.  A lot of that is due to the IRA CD.  It's a shame I can't pump more money into that account, but that's the downside of a CD.  On top of that, the bank site shows you what the final balance is going to be at the end of the term.  It kind of takes the fun out of it, but oh well.

On other fronts, this month's stock purchase added 2 shares of Hormel to the portfolio.  You know them, they make chili, as well as a few other things.

We should probably talk about the DRIP thing, right?  It is in the title.  DRIP is the shorthand term used to describe having your dividend payments automatically reinvest into the company from which the dividend came.

So, I've been going back and forth on this.  A lot of investors swear by its power, citing it as the third leg in the dividend investing tripod (along with new capital and dividend increases).

Despite this, I was skeptical.  It seemed counter-intuitive.  Honestly, DRIP seems like it makes more sense if you're investing for market value.  You're getting "free" shares that you can sell when the stock hits a decent price.

If the goal is to build up income, turning the income down doesn't seem like it helps.  Yeah you get more shares, but you're not seeing the income anyway so there's no change there.

My original plan was to sort of split the difference and DRIP a company stock at every tenth purchase.  I pulled an audible, though and just decided to DRIP every company that I could (basically everything but Armanino and Best Buy.)

Why the change?  Well, for one thing, the dividends aren't that substantial at this point.  It's not like I'm drawing money from the account to pay bills.  On the contrary, I'm aiming to pump more money in.  In the meantime, I figure I might as well put that money to use and add fuel to the FIRE, as it were.

On top of that, as I noted before, trade commission fees are a killer and this bypasses that.  It, along with fractional shares, is one of the major selling points of the system.

I'm also behind schedule on this front, so hopefully, having those dividends go into growing my portfolio will help move things along so that I can get back up to speed.

With online trading, turning the DRIP on and off is quite easy, so should the time come when I do need that income, I can adjust it accordingly with little hassle.

In the meantime, though, I did get about a half a share of Barnes and Noble added as a result, so my forward income did get a boost...sort of, but I'll get to that in next month's post.

"stock dividend" by CreditDebitPro is licensed under CC BY 2.0 

















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