Of all the concepts in investing, few are as powerful and as underappreciated as the dividend snowball. The term refers to the process by which reinvested dividends buy more shares, which generate more dividends, which are reinvested to buy still more shares, creating a self-reinforcing cycle of income growth that accelerates over time. The dividend snowball is the income investor’s equivalent of compound interest, and for young investors who have decades for the cycle to run, it is one of the most reliable paths to financial independence. Understanding how the dividend snowball works, how to build one, and how to…
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