DRIP Dividend investing: When life gives you lemons, grow a lemon tree

Lately, I’ve seen many articles and YouTube videos on earning passive income through dividend investing. While you can treat dividends as income, you have another option – DRIP Investing.

DRIP stands for Dividend Reinvestment Plan. Rather than have your dividends paid to you in cash, the dividends are automatically used to repurchase shares of the paying company, thereby growing your investment faster by increasing the number of shares you own.

Most brokers, including several investment apps and websites, such as Robinhood and Stash, offer DRIP Investing.

Benefits of DRIP Investing:

  • Avoid Commissions and Fees on Reinvested Dividends
  • Build Investment in Dividend Company Automatically

Concerns of DRIP Investing:

  • Lack of Diversification from not investing in another company

DRIP investing is a simple way to to grow your investments that pay dividends by reinvesting your dividends without additional steps and fees. The only loss on the part of the investor is the freedom to use the dividend to purchase something else. DRIP on a stock can be cancelled at nearly any time. Therefore, if you decide you want the income from the dividend or to use the funds elsewhere, you can simply elect to cancel DRIP investing moving forward.

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