Savvy investors understand that the miracle of compounding accelerates total return, the longer the time frame, the better. I don’t think there’s a better gift for a graduating grandchild or other loved one than a gift of a portfolio of dividend-paying stocks including enrollment in the company’s dividend reinvestment plan. Assuming that the graduate can fund the portfolio, even with small amounts to start, the portfolio will compound to produce real wealth over the long term. How much wealth? Millions of dollars, as I’ll demonstrate.
Instead of giving a gift of money that the young person is likely to spend frivolously, a gift of a five-stock portfolio held in dividend reinvestment plans, is likely to stay in place and grow over the years. Your total cost to set up such a portfolio, depending on the price of the stock that you select, is somewhere around $500. What’s more, there’s a two-fold advantage to this gift. Not only will it provide a long-term financial benefit to the graduate, it will give him or her a first-hand experience with a logical approach to investing.
Continue to read to find out those five companies that we would include in a long-term portfolio...