DRIP it Like it’s HOT!!!

Investing in stocks, mutual funds, and ETFs with dividends is a great way to earn some passive income. Yes, it requires a serious amount of capital to generate even $1,000 in passive dividend income, but any money that can make money is a good thing. However, I am surprised by how many people have purchased stocks with dividends but forget one simple action on their portfolio. It is not automatic that your dividends earned from the stock go back to purchasing more stock from the company. So make sure to double-check your portfolio and click on the dividend reinvestment plans for each stock that qualifies. This way, any dividends earned from your investment go back to purchasing more of that stock. Anytime you can have automatic investing like this, it will benefit you in the long run. Slow and steady wins the race!

What is a Dividend Reinvestment Plan?

A Dividend Reinvestment Plan (DRIP) is an investment program offered by publicly traded companies that allows shareholders to automatically reinvest their dividend payments into more shares of the same company’s stock, rather than receiving cash. This process harnesses the power of compounding and can help accelerate the growth of your investment over time. DRIPs are often cost-efficient, as they typically have low or no transaction fees, but they may require careful tracking of cost basis for tax purposes. Participation in a DRIP is usually optional and can provide flexibility in how dividends are managed within your investment portfolio.

-HC

Disclaimer: Investing in the stock market carries risks, and past performance is not indicative of future results. It’s always advisable to consult with a financial advisor or do thorough research before making any investment decisions.