Reinvesting dividends is one of the most effective strategies for maximizing the growth of your investment. At Erie Shores Capital, we offer a straightforward Dividend Reinvestment Plan (DRIP) that allows you to compound your returns seamlessly. This approach is ideal for investors who want to grow their wealth without withdrawing income immediately.
What is Dividend Reinvestment?
When you invest in a Mortgage Investment Corporation (MIC) like Erie Shores Capital, you earn dividends from the interest income generated by mortgages. Instead of taking these dividends as cash, you can reinvest them to purchase additional shares in the MIC. This process allows your investment to grow exponentially over time, leveraging the power of compounding.
Benefits of Reinvesting Dividends
1. Compounding Growth
You earn returns not only on your original investment but also on the reinvested dividends. Over time, this leads to significant growth.
2. Increased Investment Value
Reinvesting dividends consistently adds to your principal amount, increasing your share of the MIC and boosting future returns.
3. Tax Advantages
When dividends are reinvested within a registered account like a TFSA or RRSP, you can defer or eliminate taxes on those earnings, maximizing after-tax returns.
4. Hands-Off Strategy
Dividend reinvestment is automated, requiring no additional effort from the investor. It’s a simple way to ensure your money is working harder for you.
How Erie Shores Capital’s DRIP Works
1. Enrollment
When you invest with Erie Shores Capital, you can opt into our Dividend Reinvestment Plan (DRIP) during the account setup process or at any time thereafter.
2. Automatic Reinvestment
Dividends earned are automatically used to purchase additional MIC shares, increasing your investment holdings.
3. Quarterly Reports
You receive detailed statements showing the dividends earned, the shares purchased, and the growth of your investment.
4. Flexibility
You can switch between reinvesting dividends and taking cash payouts based on your financial needs.
Illustration: The Power of Reinvesting Dividends
Consider an investor with an initial MIC investment of $50,000 and an annual dividend yield of 7%.
| Year | Without Reinvestment | With Reinvestment |
| 1 | $3,500 | $3,500 |
| 3 | $10,500 | $11,229 |
| 5 | $17,500 | $20,414 |
| 10 | $35,000 | $49,252 |
By reinvesting dividends, the investor sees significantly greater growth over time.
Who Should Reinvest Dividends?
1. Long-Term Investors
If your goal is wealth accumulation, doing this with your dividends accelerates growth, making it an ideal strategy for long-term investors.
2. Retirement Savers
Investors building their retirement nest egg can benefit greatly from compounding returns over several decades.
3. Registered Account Holders
If you’re investing through a TFSA, RRSP, or RRIF, reinvesting dividends enhances the tax advantages of these accounts.
How Reinvesting Dividends Benefits Erie Shores Capital Investors
At Erie Shores Capital, we prioritize strategies that align with your financial goals. Reinvesting dividends:
- Increases the overall stability of our MIC by ensuring consistent reinvestment.
- Strengthens your portfolio, allowing you to grow alongside the Windsor-Essex community.
- Offers you a seamless way to maximize your returns with minimal effort.
Getting Started with Reinvesting Dividends
Reinvesting dividends with Erie Shores Capital is simple and impactful. To enroll in our DRIP or learn more about how it can enhance your MIC investment, contact our team today. Follow us on LinkedIn, Facebook, and YouTube for regular videos about MICs and what we do at Erie Shores Capital.