whatever the dividend is gets subracted right off the share price . if you had x-amount invested the night before the dividend ,the next morning at the open if you reinvested the dividends you have exactly the same amount of money compounding for you as you had the night before .
all share price resets are mandatory at the open .
in the end how your total return is broken out is irrelevant gain wise . it may have some different tax ramifications though
This argument against dividend investing is the biggest bunch of bullshit repeated on this forum. Here are the reasons to ONLY invest in dividend-paying stocks or dividend-focused ETFs:
1. The investor can choose to receive cash or reinvest in additional shares.
2. Dividends aren’t guaranteed, but well-run companies are loathe to cut them.
3. Dividends generally increase over time.
4. Dividend growth from well-run companies keep up with or exceed inflation
5. Encourage the investor to hold the investment to continue receiving the dividend.
6. Allow the investor to enjoy cash without selling
7. Allows the investor to diversify by using the income to buy other investments
8. Indicate the company has positive cash flow
9. Indicates the company treats shareholders as business partners
10. Deter fraudulent bookkeeping, because the company needs cash to fund the dividend.
11. Dividends are a multigenerational income stream.
12. The investor does not have to ever pay capital gains taxes to access cash from the investment.
13. Once the investor has enough income to fund the lifestyle, he or she will never run out of money.
14. Never worry about selling at a profit or loss, saving taxes and commissions.
15. Don’t care what happens to the stock market.
16. Dividends are generally predictable.
17. Yield, dividend growth, and payout ratios make it easier to evaluate companies based on hard data and not stock tipsters.
18. Can compound shares over time through reinvestment.
19. If the investor starts earlier enough, he or she can retire early off the income.
20. If the investor is inclined to sell during a downturn, the dividend tends to support the company’s price.