How to put your dividend income to work for you
As an income investor, you're looking to invest in the best dividend paying stocks. You want to build a portfolio of shares that, over time, increases your dividend pay outs.
But do you have a plan to make your dividends work best for you? Unless you need your dividend income to live off, what should you do with it?
There are two ways that you can make your dividend income work best for you.
Read on to find out what these strategies are…
Dividend income strategy #1: Reinvest your dividends
When you receive your dividend
payments, you could opt to buy more shares.
This has two main advantages…
Firstly, if you reinvest your dividends to buy more shares, the number of shares you own will grow. Over time, you should benefit from a capital gain as the price of share grows.
Secondly, this means the number of dividends you receive also grows. This means you can buy even more shares with your dividends.
This strategy lets the power of compounding works its magic and grow your returns over time.
Dividend income strategy #2: Tuck your dividend income away
Instead of just spending the dividend income, put it into an allocated account and don’t touch it.
Over time, the interest will grow as your balance grows. You will earn interest on your interest. Then you can let the power of compounding work its magic and watch your savings account grow.
This strategy can also be useful if you want to be able to easily access the funds if you need to without having to sell any of your shares.
So there you have it, how to put your dividend income to work for you.
*********** New release ************
Revealed: Killer Dividends for 2014 and Beyond!
The South African economy is struggling on the back of a wave of endless strikes and your hard-earned rands are worth a fraction of what they were…
But lucky for you, I’ve picked out four heavy-hitting, high-yield – virtually bulletproof- stocks that can stand the test of tough economic times like these.
To discover the stocks that can “rand-proof” your portfolio and earn you a steady stream of income… Click here now.