Redefine Properties Limited (RDF) is paying dividends - You have a decision to make
If you've been holding Redefine Properties (RDF) shares, you have an important decision to make. You see, the company is paying a dividend of 41.70 cents for the six months ended 29 February 2016.
You need to choose if you want to receive the cash dividend or use the dividend to reinvest to buy more shares.
The biggest advantage of reinvesting your dividends is compounding
You accumulate more shares and increase the value of your position at a faster rate. By increasing the number of shares you own, you start to receive more dividends from the extra shares you buy. The longer you reinvest your dividends, the more shares you buy and the more dividends you receive.
Investing for income with dividends
If you’re investing for the long-term, chances are you’ve got some sturdy dividend paying companies in your portfolio. Over the years, dividends can contribute a substantial portion of your returns from investing in shares.
And the good news is you can boost this return even more by reinvesting your dividends instead of taking the cash. If you don’t need the income from your investment portfolio, this makes perfect sense.
When you reach retirement and need the income from your dividends, you can stop reinvesting. But if you’ve reinvested for a considerable period of time, you’ll have a tidy income from your dividends to look forward to.
The secret to making this work is time
The longer you do this for, the larger the effect of compounding. The more time you have to get your dividends working for you, the more powerful - and impactful - it becomes to your portfolio.
But the longer you let dividends go to waste, just piling up with no real direction, the more gains you're wasting.
If you want to receive your Redefine Property dividend as a cash payout, you don’t have to do anything. If you decide to reinvest your dividends, you need to let them know before Friday, 27 May 2016.
I hope you make the right decision.