Dividend Snowball: Building Predictable Cash Flow
Dividend stocks are often thought of as income instruments, and they certainly can be. Many retired investors derive a significant portion of their income from dividends, and there are lots of stocks with excellent track records of consistent Dividend payments over decades.
However, dividend stocks can also be excellent compounding instruments, especially for investors who still have many years until they'll rely on their investments for income. If this describes you, it's important to learn about the dividend snowball effect and how it can help you build a much larger income stream over time with minimal ongoing effort.
The dividend snowball effect refers to the growing income stream that results from the automatic reinvestment of dividends in additional shares.
Source Fool.com
