How Should One Introduce Dividend To Portfolio When Starting Out?

Discussion in 'Stock Market Education' started by Colebra, Mar 17, 2015.

  1. Colebra

    Colebra Well-Known Member

    Jul 2014
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    Here's my actual question:

    Let's say I invest in iShares Core S&P 500 ETF, and now I want to introduce dividend of somekind to my portfolio...
    How important is it that I buy something with different companies than iShares Core S&P 500 ETF, in order to build diversity, broad geographical exposure, etc?
    What % of portfolio should be used for dividend?
    How long should one wait before withdrawing dividend profit?

    Thanks guys!
    Last edited by a moderator: Jul 8, 2016
  2. crimsonghost747

    crimsonghost747 Senior Investor

    Mar 2014
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    Not that important in my opinion. The ETF is well diversified and buying a company included in it is just a way to have more exposure to that particular company. So if you are liking a company then by all means invest directly into it as it's % of your portfolio will be really small if owned only through that ETF.

    completely up to you and your risk profile.

    When building a long term investment portfolio the idea is generally to reinvest the dividends until the portfolio value reaches your goal. Look up compound interest.
    Last edited by a moderator: Jul 8, 2016
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

    Feb 2014
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    I agree that ideally you'd want to just keep reinvesting the dividends, at least until you get to a point where you're more or less retiring and choosing to live off of your investments.

    IF you're invested in the S&P 500 index and want to hedge that by putting a few bucks in something else, you might consider a little commodities exposure via ETFs in things like gold or silver, a few bucks in higher yielding corporate / emerging markets debt (reinvest the interest payments), a few bucks in a fund specializing in high-dividend stocks, etc.

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