How DRIPs Could Make You Rich
Everyone knows that Wall Street is rigged against the “little guys” like you and me.
But what if I told you I’ve cracked the code on Wall Street’s best-kept secret?
I’ve figured out exactly what gives them such an unfair advantage over us “average” investors.
And the best part is you don’t have to be a hotshot on Wall Street to use this technique and start seeing the money roll in.
The secret is known as dividend reinvestment plans (DRIPs).
DRIPs typically give out 100–200% more than a typical dividend would over time!
So why haven’t you heard about them before?
Well, for starters, they’re restricted by the government from being advertised. But a handful of everyday folks have used DRIPs for years to quickly grow their income and retire rich.
So how do they work and where do you start?
Let’s dive right in…
Cutting out the “Middlemen” for Bigger Gains
With DRIPs, instead of receiving a traditional cash payout from your dividend investment, you actually reinvest that money back into the company and purchase additional shares.
Plenty of companies operate their own reinvestment plan. Once your initial stock is purchased, you should then have the option to enroll in their offered program.
By cutting out the middleman, you avoid paying any fees that it would take to cash out and reinvest on your own.
Not only does this make it that much simpler, but your return is higher when you alleviate those fees. Plus, it takes half the time it would to cash out and get back in.
With this approach, you can start small and watch your investment build over time. Best of all, many of these programs are offered at little or no cost to you!
Now let me show you an example of how DRIPs work.
A Case Study: Coca-Cola
Here’s a great example of how DRIPs could exponentially increase your profits, using one of Warren Buffett’s favorite stocks: Coca-Cola (NYSE: KO).
Let’s say you invested $5,000 in KO shares 11 years ago. Your investment today, after a 2-for-1 split in 2012, would be worth a total value of about $8,600!
That’s a not-too-shabby $3,600 gain. And roughly two-thirds of that profit, or $2,350, came from cash dividends alone!
But now I want to show you how you can amplify your upside profit potential even more, thanks to the magic of compound dividends.
Score Record-Setting Payouts
All you have to do is use a DRIP to reinvest the dividends you earn from your shares in more KO stock over time.
Using KO as the case example, your original $5,000 stake would grow to about $11,000 today.
A $6,000 profit!
That’s two-thirds more money in your retirement account for barely lifting a finger!
All by following the one simple step of compounding your dividends.
No doubt, many investors turned up their nose at Coke’s 2.8% dividend yield back in 2008 as not rich enough.
But if you staked your claim in KO 11 years ago, you would be cashing dividend checks of $350 this year alone, thanks to acquiring about 45 additional shares over the years from reinvesting your dividends.
And that’s a rich yield of 7% based on your original $5,000 investment!
How to Get Started
To get started, I recommend buying one share of high-quality dividend stock and getting it enrolled in the dividend reinvestment plan as shown above.
Then contribute more money as you feel comfortable.
Remember, the more you put in, the more your dividends will be able to purchase.
And soon enough, your account will be big enough to fund your retirement and then some!
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch