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Friday, February 15, 2013

Dividend reinvestment

When you reinvest your dividends, the highest percentage increase in income occurs when the share price is lowest on the prior reinvestment date.

This is the result of the reinvested dividends buying the most number of shares when the share price is low.

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Conversely, the lowest percentage increase in income occurs when the share price is highest on the prior reinvestment date.

This is the result of the reinvested dividends buying the least number of shares when the share price is high.

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This is nothing but a variant of "buy low, get more."


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