Investors less likely to take money and run
New research out of the United Kingdom suggests investors are more interested in building their portfolios than taking dividends.
The research, released by Equiniti, the UK offshoot of Sydney-based research company CoreData, found that two-thirds of UK investors, given the choice, were more likely to reinvest share dividend payments than take the dividend payments as cash.
It found that 67.8 per cent of investors would choose to reinvest in circumstances where the average UK share dividend payment topped £250 last year.
Commenting on the result, Equiniti Investment Services director Mark Taylor said dividend reinvestment could represent a solid strategy.
He cited the example of any dividend reinvested in the FTSE 100 Index before 2010 having reaped an additional return of 9 per cent as a result of the rise in the index for the year ending 31 December.
“Many people prefer money in their pocket today over the promise of future payment, however the impact of interest compounding over time is how investors may benefit in the long term,” Taylor said.
AUTHOR
Mike Taylor
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