DGI Adventure – 10-01-2015 Payday! – Westwood Holdings Group Inc. (WHG)

I got paid today. Woo hoo! WHG paid out their $0.50/share
dividend which means I got $15.00 cash money out of my 30 shares. Awesome.

I purchased the stock a little over a month ago on August 24th,
which was a great day to buy stocks. Lots of red everywhere.

What’s not awesome is that I apparently never changed the
dividend reinvestment setting in my brokerage account for WHG. So it
automatically reinvested that $15.00 to buy 0.2670 shares at $54.35/share (no
commission on automatic dividend reinvestments). That really pisses me off for
several reasons.

Reason #1: I’m compulsive. When I bought WHG amid the chaos
of 8/24 I picked it up for a screaming deal at $50.50/share, which means my
invested yield is right at 4%. Since it has a pretty high yield, and I had
funding, I bought it in my ROTH IRA account which I just opened this year and
only has 5 holdings for now (looking to add two more before the year’s out).
The ROTH account was so clean. All of the holdings had mostly round lot sizes.
I had a partial number of BIV shares because I initially bought that through an
automatic investment trade so it invested by dollar amount instead of lot size.
But I let it reinvest until I got to 11.001 shares which is pretty close, then
I turned off reinvestments. The account was so clean. Now I have to stare at
30.2670 shares of WHG. Damn it.

Reason #2: My WHG purchase has so far played out to be a
very successful gaff fish. WHG is a small cap company, and doesn’t typically
have a lot of volume on any given trading day. The 24th was just a
crazy day and there were some goofy prices…this was one of them even if it was
off most people’s radar. The fact that I got those shares for $50.50 each was a
very short lived technical breakdown in the market making process…there wasn’t
any news or anything. It was just something that happened. All this automatic
reinvestment did was lower my invested yield, albeit by an extremely small
amount. I like WHG stock a lot, and my fair value estimate is around $66/share
so it’s not the end of the world that the $15 went to 0.2670 shares. But I didn’t
want to buy 0.2670 shares at $54.35/share after I already got it for 7% less
than that.

Reason #3: The other principal benefit to selective versus
automatic dividend reinvestment is it helps lower my commission costs. At least
if you choose to think about it that way, which I do. I mentioned that WHG is
held in my ROTH account. I have maxed out my contribution of $5,500 for 2015,
which means I can’t add any more capital until next year. I do have two more
purchases to make, but I only have a $2,585.58 in cash. That means I can only
make one investment of $1,400 or more, which is my minimum for non-automatic
trade orders ($6.95 commission = 0.5% commission or less). For the other
purchase I can make an auto investment for a $3.95 commission, but that limits
any gaffing opportunities, and gives me partial share lot amounts (which is a
moot point now I guess). I might have justified bending my 0.5% rule and set a
smaller limit order with the remaining $1,000-ish in cash, if I could have
convinced myself that commission was “free” because I had gotten cash from the
WHG dividend.

Earlier this week I got $6.45 in cash from GILD which is
also in the same account. So I guess I can still justify it. But the fact that
GILD is even in the ROTH kind of bugs me since it’s a lower yielding stock. I
made that purchase much earlier this year before I had fully formulated my
strategy.

I wish there was a way to adjust the global account settings
to where any time I buy a new stock the dividend reinvestment is automatically
switched off rather than automatically switched on. Maybe there is, I will call
them next week to see. It makes sense that the default is automatic
reinvestment. That’s what the Church of Buy and Hold would have you do. But
it’s not what I want to do, and kind of bums me out on a payday, which is
should be a day of celebration.

Oh well.

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