A few days ago, I posted about the tremendous increase in assets ETFs experienced over the past few years.
While on the subject, should you re-invest dividends at all? There are different views, and I understand all about compounding your earnings. However, if you are investing with a taxable account, you should definitely reconsider.
If you are invested in a no load fund or ETF that pays regular dividends, your year end basis calculations could be a nightmare, or at least require some time commitment on your part. Your tax preparer will not want to do it.
The other choice is, one that I favor, to let your dividends accumulate. They will earn interest in the money market portion of your account and compound that way. Once you have a more substantial amount collected, say a few thousand dollars, invest the lump sum.
This will also give you the opportunity to put your money in a different fund/ETF at that time, in case the one that generated the dividends is no longer a great performer.