You Should Always Reinvest Dividends

I consider myself a fairly frugal person. I like cutting recurring expenses, which is why I drive a ten year old car and only have a discounted cell phone with the lowest plan possible. Saving money and investing in quality dividend stocks is just one of the strategies I utilize to increase my dividend income. Cutting expenses however can only go so far however. That’s why generating extra income is so important to me. Besides the dividend income from my portfolio, I often look for brokerage deals in order to find brokerage bonuses or free trades. I also like teaching young people how to save and invest for their future.

Albert Einstein had once said that compounding of interest was one of the biggest wonders in the world. With dividend reinvestment, investors could take advantage of this compounding for wealth accumulation. In addition to that, by selecting companies whose stocks regularly raise dividends, investors could essentially turbocharge their returns in the long run. For my 40+ positions I typically collect the dividend income until it reaches a certain threshold, and then I reinvest it selectively in the most attractive dividend stocks at the time of purchase.

Source: InvestorPlace

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