dividend reinvestment plans
It's a strategy that isn't discussed often in the financial media, and on top of that, it has an odd name. So if you're wondering why you need to know how to invest with DRIPs, just wait until you learn how powerful they can be.
DRIPs are Dividend Reinvestment Plans - at its most basic, a simple, easy way for long-term investors to reinvest money into a company they already own.
DRIPs: How to Invest in Dividend Reinvestment Plans
The real secret to long-term investing success is income - and with stocks, that means dividends.
Numerous studies, both academic and financial, have found dividends accounted for more than 60% of total U.S. stock market returns since 1870.
More recently, a study by Ned Davis Research covering the period from 1972 through 2008 found that dividend-paying stocks provided an annual return of 7.6% versus a mere 0.2% for non-dividend-paying shares.
What's more, companies with a record of steadily raising their dividends returned an even more impressive 8.6%.
But if you really want to boost your returns, investing in DRIPs - dividend reinvestment plans --is a safe, steady road to building true wealth.
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