Best use of dividends?

Keen to hear whether there are any holes in my thinking re: dividends.

I'd like to use debt recycling in my strategy moving forward given I now have a PPOR. Some articles suggest you use dividends to pay down non-deductible debt, then draw it back out and reinvest.

However, the major downfalls of this that I see are:
- No discount for using a DRP (I believe some shares offer a small discount on share price if you use DRP)
- No brokerage fees for buying back in if you use a DRP

I'm guessing that rather than collecting a cash dividend, paying down non-deductible debt, splitting loan, re-investing into shares and paying brokerage fees, it would be more beneficial to just use a DRP? (I'm mindful that you don't control the price at which you're reinvesting the dividend, but I'm no pro at picking the right time anyway, so not concerned about this).

I would be contributing plenty of cash into my redraw account against my PPOR anyway, so missing out on dividends won't make a big difference... (I think)

Have I missed anything?

 

You would be better off paying it off paying it off with growth shares especially if you were going to DRP. You would also get 50% tax discount on CG. You could pay it off anyway with the amount of capital you need to get enough dividends to pay it off. Growth shares could pay it off in less than half a decade, dividends shares could take many decades.

 

In similar situation as @Jmillar - Which shares are your usual that fall in the growth category?

 

I have liked drps as a set and forget process for dividends. For me the dividend amounts are usually not large so normally not worth getting too fancy as amounts under 4 figures are of little effect. If I want money out it is quick and a relatively cheap process and you can do this annually once dividends have accumulated enough to make it worthwhile. The worst part is keeping track of which shares you sell each time remembering that you can choose which parcel of shares you are selling for cgt purposes.