Ramp Up Your Portfolio’s Growth with Dividend Reinvestment Plans

With interest rates near all-time lows and equity markets in flux for much of the past decade, dividends have become an increasingly attractive feature for stock investors. But, while it's always nice to receive those quarterly checks, dividends do little to help you grow your wealth if all you do is spend the money as it comes in. If that's your approach, it's regrettable because an array of financial and academic studies have shown that dividends have accounted for more than 60% of total U.S. stock market returns since 1870. In fact, research reported in the book "Triumph of the Optimists: 101 Years of Global Investment Returns" found that over the course of the 20th century, a portfolio with dividends reinvested would have generated nearly 85-times the wealth of the same portfolio relying solely on capital gains for growth. Fortunately, it's now quite easy to take advantage of the growth potential offered by regular corporate payouts to shareholders, thanks to the proliferation of so-called DRIPs - or dividend-reinvestment plans.