Should you reinvest dividends or take out the cash?

I've always thought to reinvest until you are ready to cash out?

As far as dividends go, I see three ways to use them:

1. Reinvest dividends. It's the obvious choice. Keep building the position so you get more dividends in the future.

2. Use dividends as income. The second obvious choice and ideal for retirement (not before retirement unless absolutely necessary).

3. Use dividends to create or grow other positions. I seldom/never hear anyone mention this, but I think it could be a good idea. Essentially, take the dividends as cash and use that money to buy different stocks.

#3 can be used to diversify one's portfolio and/or to use dividends to purchase shares in faster growing/non dividend paying companies. In the case of the former, a portfolio heavily invested in stocks like T and F, which currently have high yields, could have its dividends used to buy a REIT, an MLP, and/or a consumer staple (like CALM). In the case of the latter, that same portfolio's dividends could be used to buy BRK or RLI, for example.

So to answer your question, don't use the dividends as cash income until retired; instead, reinvest them or use them to diversify.

I reinvest dividends in my retirement accounts and take the cash in my trading account. I use the cash in my trading account to buy whatever stock I find interesting at the time.

25 years away? No brainer is to reinvest

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I let the dividends pile up in cash along with new money. Then when I have a few thousand

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How long does it take you to get to a few thousand?