Today’s Smart Investor tip comes courtesy of Dan Caplinger, writing for The Motley Fool, who offers up some simple tips for a beginning investor:
Reinvest your dividends to keep building your position.
Investors want two things from stocks: current income and long-term growth. Dividend stocks can give you both of those desirable traits, with the best choices paying reliable and growing dividends while still allowing you to share in the growth prospects of the company’s underlying business.
One popular dividend strategy involves reinvesting the quarterly dividends you receive to buy additional shares of stock. Some companies offer Direct Reinvestment Plans through their investor relations departments, and many brokers offer a similar service that automatically takes dividends and purchases fractional shares at no commission.
Check with your broker to see what services it offers: With hundreds of high-quality blue-chip dividend stocks as well as many ETFs and mutual funds that specialize in dividend investing, it won’t be hard to find promising candidates for your investment portfolio.
Check out his full post over at Fool.com.
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