► Subscribe for new videos every day!: http://bit.ly/dai_youtube ► Dave Van Knapp's Top 30 Dividend Growth Stocks for 2021: https://DaveVanKnapp.com/ ► Dave Van Knapp's Dividend Growth Portfolio: https://dailytradealert.com/dave-van-knapps-dividend-growth-portfolio/ ► Prefer to Read? https://dividendsandincome.com/2021/08/19/i-just-bought-more-shares-of-this-stock-for-my-dividend-growth-portfolio/ ► Jason Fieber’s Early Retirement Blueprint: http://dividendsandincome.com/early-retirement-blueprint/ In my Dividend Growth Portfolio (DGP), I reinvest dividends once each month, in the middle of the month. Between reinvestments, I let dividends accumulate in cash to fund my next monthly purchase. The amount varies each month, but it is usually in the $400-500 range. I have been recently adding to two new positions that I started this year, Merck (MRK) and Schwab’s U.S. Dividend Equity ETF (SCHD). Right now, the latter is a little over-priced, but Merck is still undervalued. So I decided to add to it and continue to build it as a position in my portfolio. Merck is a very high-quality company. Here is its Quality Snapshot. Its total score of 24 points falls just one point short of “perfect” on this method of judging a stock’s quality. Merck achieved 24 out of 25 total points. Besides its quality, here are some other factors I took into account in deciding on Merck. Especially note the undervaluation of Merck’s shares. Merck’s price has been moving basically sideways since early 2019, even though its earnings have been rising steadily. That sideways movement of Merck’s price is OK with me, because I am accumulating its shares. Long-term, once I own a substantial position, I will want Merck’s price to rise along with its earnings. But short-term, while I am building my position, I’m happy to see it remain “dead money” for a while longer. That puts me in league with Warren Buffett: The logic is simple: If you are going to be a net buyer of stocks in the future, … you are hurt when stocks rise. You benefit when stocks swoon. As I’ve stated before, finding a high-quality stock with rising earnings and a flat price over the past few months or years has become one of my favorite scenarios for establishing a long-term position. The seven additional shares of Merck will add $18 to the portfolio’s annual dividend flow, or about 0.3%. That’s just enough to kick the DGP’s yield on cost (YOC) up to 10.9%. And now for my monthly lecture about dividend reinvesting: I know that $18 / year sounds small, but if I make 12 such reinvestments per year, that amounts to more than a 3% increase in income without doing a thing other than reinvesting the dividends. That increase from reinvesting comes on top of the annual increases from the companies themselves. That’s how compounding works. Compounding means to earn more money from money already earned. I will be making more money ($18 additional per year) from money already earned (the dividends that I just reinvested). This purchase is in plenty of time to get Merck’s Q3 dividend on the new shares, which is payable in October. These monthly dividend reinvestments are perfect examples of how compounding works behind at its most basic level: Adding new shares using money received (via dividends) from shares already owned. The monthly reinvestments are also examples of opportunistically investing in excellent companies at attractive prices. It is always fun to find a high-quality company that fits my investing goals when it is on sale. That’s generally how I invest. I keep surveying the landscape for companies that fit my needs and are well-valued, and I grab them when I have dividends to reinvest. I don’t care what order I buy stocks in. Over time, positions grow naturally via purchases made at good prices. I like to do that rather than “chase” one or two stocks in a concerted effort to grow them. Instead, I “chase” quality and value wherever they may be. Over the long haul, that results in a diversified portfolio. FOLLOW US: ► Website: http://www.dividendsandincome.com/ ► YouTube: http://bit.ly/dai_youtube #DGI #DividendGrowthStocks #DividendGrowthInvesting $MRK $SCHD LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Dave is not a licensed financial advisor, tax professional, or stockbroker and he does not purport to be. Links above may include affiliate commissions paid to the owners of Dividends and Income and help support this channel.