"I have been meaning to ask David a few questions about his dividends. He has made recent mention of using his accumulation of dividends in his long term portfolio for additional purchases. Does he ever reinvest dividends in any stock? What are his (and yours) thoughts about reinvesting dividends in general, specifically is it OK in one situation - like a mutual fund - but not OK in another, like a common stock? Is there a determination that it is better to reinvest in oversold markets as opposed to overbought markets? Thanks for your considered reply in advance."

David Fuller's view I assume that you are referring to an automatic dividend reinvestment policy. I have not done this, to date, although it seems a good idea if you like the company as a long-term investment and favour cost averaging.

I do not know if there are any tax advantages with this policy but if so, they presumably vary from country to country.

At some stage of my life I may wish to augment my income with dividends but so far I have allowed them to accumulate for a while, before investing them in one of my current holdings or in a new purchase. For instance, earlier this month I opened a small position in Asian Citrus Holdings with some accumulated dividends and a day later I topped up my investment in Royal Dutch Shell because it had pulled back towards the MA.


Overall, I think subscribers are likely to be the best judges as to the timing and selection of their dividend re-investment policies.