How to Increase Income Year Over Year

Dividend reinvestment is taking the money you make from dividends and using it to buy more dividend paying stocks. This can be through DRIPs, or manually which allows for more diversification and choice. However, even reinvested dividends are still taxable each year.

Overtime, reinvestment snowballs into exponential growth. For example, let's say you invest $10,000 into a stock with 3% yield and 5% annual growth. If you simply take your dividends as cash, you would have made $63,000. However, if you reinvest your dividends, you’d make $112,000.

Source: Corporate Finance Institute