Buying dividend paying stocks can definately be profitable. However there is a way which an investor can get more from their dividends.

This is by taking advantage of something called drip investing. Drip investing lets you reinvest the dividends that you make back into the company. This can be many times more effective then simply spending the dividend that you recieve because the money can be continuously reinvested and can take full advantage of compound interest.

So how exactly does drip investing actually work? In order for an investor to take advantage of this strategy they must own the stock. So they have to buy it through a broker or find another way to get a hold of a share.

The investor can then join the companies drip investing program. The dividends can also buy stock direct from company. This also lets the investor get around any brokerage fees which normally occur anytime they buy a new stock into a brokerage account.

Another nice thing about this program is that the investor is able to buy percentages of stocks meaning that they do not have to have the full price of the stock in order to buy additional shares.

So if you get enough dividends to buy 1/3 of a share of stock the plan will automatically buy 1/3 of a share of that stock without waiting for more money to be invested into it.

When the investor is ready to sell the stock, they would have to sell it back to the company that they bought it from. This can help to avoid any confusion of owning small percentages of stocks.

Usually if you invest in dividend and the company has a drip investing plan it can be many times more profitable then investing into the stock without the program.