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The Pocket Idiot's Guide™ To Direct Stock Investing by Lita Epstein, Douglas Gerlach

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Reinvesting Dividends

Since reinvesting dividends is not automatic, when you fill out your enrollment form be sure to check the option to automatically reinvest your dividends. It’s one of the best ways to build your portfolio without having to come up with cash.
Many companies allow you to reinvest dividends at no cost. Try to build your portfolio primarily with those companies, but as long as the fees are low it can’t hurt to include others as well. For example, Colgate-Palmolive charges a service fee of 5 percent of the investment amount with a maximum of $1.25 per dividend payment plus 10¢ per share purchased. At the time of this writing, Colgate-Palmolive’s quarterly dividend was 44¢ per share. If you owned 10 shares, that would be $4.40. ...

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