I have quite a few stocks that pay dividends. The best way to grow that stock is to reinvest your dividends. Other financial advice sites suggest doing it with your mutual funds. I am suggesting doing it with your stocks too. By reinvesting your dividends your are increasing your stock holdings for free. Assuming the stock you own is worth keeping, what better way to increase your holdings for free. I have accounts at both Schwab and Scottrade. Scottrade doesn't allow dividend reinvestment on individual stocks and Schwab does. Therefore, I keep all my dividend paying stocks in Schwab and reinvest those dividends. Schwab does this for free.
I did this for two main reasons. One, with my Scottrade account I found that the money I received from dividends just went into a money market account. Most of the time the stocks I owned paid a higher yield than the money market so I felt I was leaving money on the table. The second reason I do it is that I can then see the true growth of that stock since the dividends, which are part of the overall return, are reinvested. I get a more accurate picture of the true return of that stock.
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