[Editorial] Should I turn on DRIP in a taxable account or take the cash?

Question

Editorial discussion starter from the Capital Lens team. In a taxable brokerage account, reinvested dividends are still taxed in the year they are paid. Is DRIP still worth it there, or is it better to collect cash and rebalance manually?

Capital Lens Editorial · Accepted Answer

Editorial answer: DRIP still works in taxable accounts because the tax is owed either way. The trade-off is record-keeping — every reinvestment creates a new cost-basis lot. Many investors reinvest automatically while young and switch to cash payouts later to rebalance without selling.

[Editorial] Should I turn on DRIP in a taxable account or take the cash?

1 answer