The Case Against Using a Dividend Reinvestment Plan

I recently outlined my case for using a Dividend Reinvestment Plan here at Seeking Alpha. In this article, I will take a look at the factors that suggest it may not always be the best plan to use a Dividend Reinvestment Plan (DRIP).Buying Better ValueThe top reason why you may not want to use a DRIP is if you are a seasoned investor who can identify value and times of opportunity versus blind, investing on a regular basis. DRIPs typically are used for automatic reinvestment of dividends, regardless of share price. A seasoned investor might instead choose to let dividends pool and when an attractive buying opportunity presents itself, allocate the collected cash at irregular intervals rather than consistent monthly or quarterly intervals.Now, most investors can't accomplish this concept effectively due to a lack of market knowledge and patience. Most people should do regular reinvesting, but if... Read more