Should you reinvest your dividends?

Everybody loves dividends. John D Rockefeller, often regarded as the richest person in modern history, once said, "do you know the only thing that gives me pleasure? It's to see my dividends coming in." However, investors are often indecisive on how to spend their dividends. Should you use it as a source of income, as many income investors do, or should you reinvest them in the same business to further fuel your capital appreciation? When to reinvest Many investors favour the dividend reinvestment strategy because of the potential snowball effect it can generate. If a company keeps paying high enough dividends without sacrificing its growth prospects, reinvesting your dividends to purchase more stocks of the company seems like a no-brainer