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dividend

Investing dividend

When a stock or ETF pays dividends, the price falls proportionately. The amount of the dividend therefore says nothing about the long-term appreciation. Psychologically, such a dividend often feels good, but it has no real added value. In a crash, the so-called high-dividend shares will also fall faster because it is more difficult to continue to pay out the promised dividend in such a situation. The only advantage is that without this knowledge you will assume that they will continue to yield a fixed return (and you will ignore the loss of value), which will make you less likely to panic.

It is best to invest dividend paid immediately (or at your next investment). This way you get value on value increase. When reinvesting, you need to see if the investment goes to stocks or bonds to keep your risk profile intact. With accumulating shares/bonds, there is no need to manually handle dividends.

dividend.txt · Last modified: 2020/05/26 20:11 by dreas