Discussion paper

DP18657 Reinvesting Dividends

It is a long-standing fact that retail investors largely consume dividends with previous studies estimating consumption rates of up to 75%. Using six different datasets, we show that dividend consumption rates have decreased substantially over time to less than 20%, today. Instead of consumption, we find reinvestments into securities portfolios of up to 80%. We provide evidence that this time trend is driven by the transition from checks to direct deposits for the payout of dividends. While it was easy and tempting to spend dividend checks in the past, today’s dividends sit in brokerage cash positions, waiting to be reinvested.


Mueller-Dethard, J, N Reinhardt and M Weber (2023), ‘DP18657 Reinvesting Dividends‘, CEPR Discussion Paper No. 18657. CEPR Press, Paris & London. https://cepr.org/publications/dp18657