Dividend investing for stocks with high dividends choose DRIPs

Passive Income is basically the art of making the most amount of money with the least amount of effort. There are many ways that one can achieve this coveted aim that any sane person would want to know as much as they can about. Dividend investing in companies is one of the ways that an ambitious investor can achieve this aim. When you become a shareholder in one of these companies, they will pay out an appropriately apportioned share of their profits to you.

The word dividend comes from the Latin word ‘dividendum’ referring to anything that is divided up. This was applied to a number of participants dividing war booty or the rewards from trading. Now, similar to then one would want to raid the richest city or hopefully invest in stocks with high dividends.

The practice nowadays is that companies retain a portion of the profits, called the retained earnings and the remainder is divided amongst the shareholders according to the equity or amount of shares each shareholder owns. This dividend payout is done once a month, a year or a few times a year. If you get lucky you might even, in addition receive a bonus dividend.

Now, the question is what do you do with your share from said dividend investing? Well you can either keep the dividends as cash or reinvest in the same company using dividend reinvestment plans or DRIPS. This is a very good way to increase your share in the relevant company, thus increasing your share in a positively producing company holding stocks with high dividends. DRIPS investment portfolios run on automatic and are a great long term investment strategy as long as the company in question, on average performs positively and steadily. An added bonus is of course that you save on transaction fees usually incurred from the purchase of additional shares.

DRIPS dividend investing is a great way to invest if you are one of those people who do not like to watch the ups and downs of the markets with an eagle eye. Of course you should keep an eye on all your investment, but with DRIPS you do not have to do it as much.

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