Dividend Income is one of the passive income which helps a lot of people.my father gets good amount of dividend income which he uses for his monthly income. But for us, since we are still earning, getting dividend income is good. But we usually don't need that dividend income for our monthly expenditure as the amount is low and our salary is there.
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So next best thing to do is to reinvest the dividend income in th stock itself and grow your stock portfolio. Say for example, I got around Rs 500 from ITC as a dividend income. The share price of ITC is Rs 400, so I can buy 1 share of ITC from the dividend income itself. I know 1 share is too low but still when doing this frequently you might be able to generate good dividend income in the years to come.
I usually reinvest the dividend income, though I get very few dividend income from my stocks. Usually around Rs 3K in a year thar mean Rs 250 per month which is quite low. But I try to reinvest that Rs 3K dividend income in the stocks which will give growth plus dividend. I know people will say that why not buy the growth stocks itself and don't buy the dividend paying stocks. I need dividend paying stocks because at one point of time I need monthly income from the stocks and till that time I want to build the stock portfolio for my dividend income.
And this dividend portfolio needs quite a big portfolio amount. Also you don't want to go all on the dividend portfolio because then the growth will be slower. And that's why I try to invest around 5% of my monthly savings to the dividend stocks and then whetever dividend I get, I reinvest that amount to buy the same stock ot similar stock.
