How to reinvest dividends

If you want to make money from the stockmarket, you need to be putting your dividends back to work. Matthew Partridge explains.

821-Strat-1200

Let your broker do the hard work
(Image credit: This content is subject to copyright.)

Most coverage of the stockmarket revolves around share prices and whether they've gone up or down. Dividends enjoy far less attention. While most of us have a pretty good idea of the FTSE 100's level at any given moment (give or take a few hundred points), far fewer people could quote you its current dividend yield (3.7%). That's a pity because dividends are a far more important source of returns than capital gains. In the past 20 years the FTSE 100 has risen by 71% in price terms, equivalent to a rather pathetic 2.7% a year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri