15H·

Reinvesting dividends - what's the best way to do it?

I expect to receive around €3,000 in dividends this year, i.e. an average of €250 per month. 🎉

And my goal is clear: don't leave it lying around, reinvest it straight away.

But now I'm asking myself: what's the best strategy here?

How do you do it with your dividends?

Options I am considering:

A fixed ETF just for reinvesting, e.g. a dividend ETF or world ETF - and put everything in there every month, e.g $VWRL (+0.13%) or $VWCE (-0.07%)
Adjust flexibly every month and invest in a dividend stock (king or aristocrat) in which I see the best opportunity at the moment, this month it was the $ALV (-0.17%)
Collect and invest 1x/year (e.g. at the end of the year / on a dip)

I've started doing it this way now:

👉 Every month check what's coming in in dividends and then set up a savings plan for the middle of the month.

I've started with Allianz as a test - but I'm not sure whether that makes sense or whether I'd be better off putting it consistently into a dividend ETF, such as $TDIV (+0.48%)

I'm also considering starting a separate ETF for this so that I can track it closely:

What have my reinvested dividends really brought me? (I find this quite motivating from a purely psychological point of view 😄) but I would actually rather reduce my positions than build up more.

How do you do that?

Do you have a "reinvest ETF"?
Do you invest on a monthly basis or rather bundle them?
Do you prefer dividend ETFs, shares, world ETFs or simply buying into the strongest positions?

Looking forward to your tips & experiences! 🙏

34 Comments

15H

If I were you, I would first clean up the portfolio and then see where the dividends are best stored.

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Ayecaramba@Ayecaramba256

14H

@Pezi just because it doesn't correspond to your strategy, he doesn't HAVE to do anything

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Julian@MoneyISnotREAL

13H

@Ayecaramba256 The contributor has asked for opinions/procedures of other users and @Pezi has described how he would do it if it were his depot.

And if I quote you: "But one question: why so many different ETFs? It doesn't make sense to me". You are agreeing with the statement from @Pezi. Clean up and then see where you reinvest the dividends (according to your statement via a savings plan).

And I agree with @Pezi, clean up first. The portfolio is a mess. Confusing, all the overlaps and correlation...
I would invest the dividends in an ETF via a savings plan (averaged over the annual dividend).

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Walter S.@Roots

13H

@Pezi Honestly - with 250k you can definitely have a few more positions in your portfolio...
The composition doesn't look random either...
Maybe it's just a different strategy than your own...

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Hansetrader@Hansetradee

13H

And on top of that, there are 2 portfolios - from my husband and myself, which I now manage on my own out of interest. However, I have already mentioned in my article that I need to sort things out

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Pezi@Pezi

12H

@Ayecaramba256 Where did I write anything about must and how do you know my strategy?

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Pezi@Pezi

12H

@Roots With a portfolio of this size, investing 20 euros in Tesla and a few other mini positions doesn't really make sense.

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Walter S.@Roots

11H

@Pezi You're right.
I just don't see the need to "muck out" in general.
Even the overlap of etfs and their simultaneous existence can have reasons...

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Hansetrader@Hansetradee

11H

@Pezi Yes, it was a gift of shares, my husband and I have merged our portfolios and somehow I'm having trouble selling anything. But I've already thought about 10 positions that I want to get rid of

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Hansetrader@Hansetradee

11H

@Roots You're actually right. I already had something in mind. But I'll soon have a look at what I can get out of smaller individual share positions. I just always find it difficult here that it's considered the ultimate goal to have a nice clean portfolio. If you have more than 20 positions you are immediately chaotic and with 3 positions "oh how great, what a clean portfolio"

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Walter S.@Roots

@Hansetradee yes, it's always a fine line...
Except for the mini positions, I think your portfolio is 👍...
And you also have to bear in mind that it's 250k... I wouldn't be comfortable with 10 positions at 25k, for example...

But it's all a matter of taste...

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View all 2 further answers

Chris@1Chrischi1

14H

far too many stocks. what do you want to achieve with the small positions?
I would first reduce to a maximum of 50 stocks or less and reallocate.

my recommendation: throw out everything under €1000

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DocTrader@value_crafter_1628

15H

Great, cash flow! 💸 I reinvest dividends in dividend shares. I have divided my portfolio, which is similar in size overall, into a dividend block, value block and risk/growth block. Other asset classes such as Bitcoin, gold and silver are kept separate for the sake of clarity. Best wishes and good luck.

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Hansetrader@Hansetradee

11H

@value_crafter_1628 Do you also have several dividend ETFs? And which ones exactly?

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DocTrader@value_crafter_1628

@Hansetradee No, the dividends there are too low for me. I have put together a bundle of shares that are broadly diversified geographically and by sector. Together with the other dividends from the value block, they yield ~5000 euros in dividends per year. Around 76k is currently invested in the dividend block.

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Royal_TS@Royal_TS

14H

Class Depot🚀 I reinvest in the $TDIV and in the $JEGP

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Hansetrader@Hansetradee

11H

@Royal_TS thank you! :) I actually have both of those too

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ThomasHH@ThomasHH

14H

There are too many stocks for the portfolio volume. I would either increase or sell everything under 1000 euros.
For 3000 dividends, for example, you get 7 shares of $ALV - that's an additional 125 euros in dividends per year and more shares and dividends the following year.
In 10-15 years, your personal dividend yield will be 10%
This is how you build wealth.

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Ayecaramba@Ayecaramba256

14H

@ThomasHH are not

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Hansetrader@Hansetradee

@ThomasHH So would you only go into one single stock, for example? For example, Allianz this year and see next year? I don't want/need to reach 10% 3-5% would be great. Right now I'm not even at 1%.

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Olli@Olli68

14H

Although 69 is my favorite number, I also think there are too many positions. Especially all the world ETFs. I would sell all the world ETFs and only keep or significantly increase $VWRL and $TDIV. That's where most of my dividends would go over the next few years.

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Demas@Demas

11H

@Olli68 😂favorite number

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Hansetrader@Hansetradee

11H

@Olli68 😀🫰 Yes, that makes sense!

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Ayecaramba@Ayecaramba256

14H

I start each new savings plan with the amounts that I expect to receive as dividends in the new year. For that long, it's 2%

But one question: why so many different ETFs? It doesn't make sense to me

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Hansetrader@Hansetradee

11H

@Ayecaramba256 so at the end of the year you adjust your savings plans to your expected dividend for the year? This is partly due to my husband and I combining our portfolios and my reluctance to sell shares ;) I am working on myself

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Walter S.@Roots

13H

Great portfolio!
I have currently created my "own dividend ETF" at trading212 and the dividends are automatically reinvested every month...

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Hansetrader@Hansetradee

11H

@Roots that works automatically there? But your normal portfolio is not with Trading212?

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Walter S.@Roots

@Hansetradee Automated- yes...
There are shares and etfs... you put together a "pie" and off you go...
Bonds are not available there...

Custody accounts: I have several

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ehrlichergauner@ehrlichergauner

I automatically reinvest the dividends from my ETFs - thanks to the free option offered by Flatex. The dividends of any individual shares flow into the VWRL as soon as a certain amount has been accumulated, so that a change to the savings plan pays off.

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Hansetrader@Hansetradee

@ehrlichergauner sounds good! And it's less work.

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Musikerie@Musikerie

My securities account is still oldschool and reinvests incoming dividends automatically

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Daffy@Daffy

I would eliminate at least 40 positions and focus on a comprehensible and, above all, sustainable strategy.

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