Reinvesting dividends is one of the keys to building wealth: It puts the power of compounding in your corner.
Some investors make compounding automatic by enrolling their shares in a dividend reinvestment plan (DRIP). Nothing wrong with that. I like to have more control over my reinvestment decisions, which is why I prefer to wait for a chunk of cash to build up and then decide what to buy. I use this method personally and in my Strategy Lab model dividend portfolio because it allows me to acquire shares of great companies when they are on sale.Report Typo/Error