Ever built up your portfolio to the extent that dividends start rolling in? If that’s you, congratulations. You have officially crossed over into the world of passive income. But now, what is your next step? Do you let the cash sit in your bank account, idle, or do you put it to work and make it work harder for you?
This guide explains exactly how to claim your dividend earnings and how to reinvest them smartly.
What Are Dividends?
Dividends are a company’s way of saying “thanks for believing in us.” When you own shares in a company that’s doing well, it might share a portion of its profits with you either quarterly, semi-annually, or annually. These payouts are called dividends, typically paid in cash, but sometimes you may receive additional shares instead.
How to Claim Your Dividends
If you are using a modern investment platform, the chances are that the dividends hit your wallet automatically, with no paperwork, no forms, no stress. But for more traditional brokerages or Nigerian stocks under CSCS (Central Securities Clearing System), you may need to:
- Ensure your bank details are linked to your CSCS account.
- Contact your registrar if dividends haven’t shown up.
- Use e-dividend mandates to receive payments directly to your account.
If you haven’t claimed dividends in a while, check with the SEC Nigeria’s E-Dividend portal for information about that or use the self-service link Self-service | NIBSS Document Management Hub Portal to claim access to your dividends swiftly.
N.B.: Please note that the platform is not frequently updated, so cross-check with your investment house to be sure.
How Do You Reinvest Your Claimed Dividends?
Now this is where you level up. You have three main reinvestment strategies:
- Buy More Shares of the Same Company
If the company is strong and still growing, why not double down? Let your dividend buy you more ownership. It’s like planting seeds back into the same fertile ground.
- Diversify Into New Assets
Spread your wings a bit. Use dividends to scoop up shares in other sectors. That way, if one industry dips, others might keep you afloat.
- Use a Dividend Reinvestment Plan (DRIP)
Some brokers offer automated reinvestment options. Instead of sending you cash, they buy more shares for you. It’s set-it-and-forget-it investing, perfect if you’re trying to build wealth quietly and steadily.
Why Reinvesting is the Ultimate Power Move?
When you reinvest your dividends instead of spending them, you are unlocking the secret weapon of investing – compound growth.
Imagine your dividends buy more shares, those shares earn more dividends, and the cycle repeats. That’s your money building generational wealth in the background. It’s giving a long-term mindset and building a legacy.
Well, before You Hit “Reinvest.”
- Check the fees. If you’re paying high commissions just to reinvest, it might not be worth it.
- Review your goals. Are you investing for income now or growth later?
- Stay informed. Not all companies are consistent dividend payers. Keep tabs.
Ready to start flipping dividends into wealth and not passive income? Contact info@fcslng.com to get started today!