Here’s what compounding dividends looks like:

You start with $100.

Average dividend yield for the S&P 500 is about 2%.

So you make $2 that year.

Great.

You start contributing more money the following year.

Let’s say $600 ($50/month).

You now have about $700.

You earn another 2%.

That’s $14.

Next year you increase your contributions.

Let’s say $1,200 ($100/month)

Now you have around $1,900.

You earn another 2%.

That’s $38.

Following year you decide you can contribute more.

Let’s put it at $2,400 ($200/month)

You now have just over $4,300.

You earn 2% on that.

That’s $86.

Now you can almost buy three shares of $T

After just 4 years you’ve established a dividend portfolio.

Disclaimer: this isn’t even including capital gains.

Nor will every companies dividend yield be just 2%.

This is just an average.

Starting to see the power of a dividend portfolio yet?

Buy strong companies that are sustainable and share appreciation will just add to your totals.

And then start parking some of your dividend earnings into ETFs.