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ETF Investing Guide: The 4 Criteria for Picking a Brokerage

A lot of ETFs distribute dividends, and it's much better to have them automatically reinvested rather than put into a cash account. The reason? Because the investor will incur ADDITIONAL trading commissions as the incoming dividends are continuously reinvested. This can eat up returns. The only time this would not be important would be if the investor plans on taking the cash as the dividends are distributed.