Investment index funds have dividends. How should investors deal with dividends? Let's learn how to deal with dividend distribution of index fund.
Are all index funds paying dividends? In fact, not all index funds have dividends. Generally speaking, index funds with high dividend yield have dividends, such as dividend index.
Index funds invest in dozens or even hundreds of stocks. Some of these stocks will pay dividends. Index funds will naturally receive dividends when they hold these stocks. When these dividends accumulate to a certain extent, index funds will pay dividends, and investors can receive fund dividends according to their shares. If the index fund does not distribute dividends, investors' dividends will not disappear, but will be directly included in the net value of the fund, and dividends directly included in the net value of the fund will be reflected in the increase of the net value of the fund.
So how is the dividend of index fund distributed? The index fund will issue an announcement before the dividend distribution, introducing the dividend shares and the rating date. If purchased and held before the registration date, dividends can be received on the issuance date.
How to deal with dividend of index fund? For floor funds, it is OK to distribute them to the account in cash and then reinvest them or take them out for spending. There are two forms of OTC funds that can be freely switched, cash dividends and dividend reinvestment. We can judge whether to reinvest according to the index fund valuation indicators. If the index fund is in the undervalued stage, we can reinvest the dividends. If it is not worth reinvesting, we can put the dividends into the fund account.
