Dividend reinvestment plans are custom-made for long-term buy-and-hold investors. Instead of sending participating investors cash dividends, the company applies those dividends to the purchase of additional company shares.

There are several advantages to stock market investors who participate: Dividend payments are put to work, transaction costs are eliminated or held to a minimum, and the additional shares are purchased gradually over time—an easy-to-implement form of dollar cost averaging.

f I could sum up my investment philosophy with one word that captures what I consider to be the most important ingredient in a successful wealth-building strategy, that word would be … dividends. I love dividends. I do not buy stocks that don't pay dividends. If my wife would have let me, I would have named our first-born child Dividends. Okay, maybe not, but you get the idea.

What is it that I adore about dividends? Well, for starters, dividends pay you a regular stream of cash.