There simply isn't any point in denying a very obvious fact. The stock market is a great wealth creation tool. If you understand the rudiments of investing in stocks, you can attain in millionaire status simply by recognizing the right stocks to buy and going ahead to invest your money in those stocks.

The way the stock market works is simplicity in itself. Some very big corporations invite the general public to buy stocks and become part owners of such companies. You buy the stocks and you now become a shareholder of the company in question. Because you are now a shareholder, when the company makes profit, you get paid some money as your own share of the profits. This money is called a dividend and over a long time, it could add up to substantial amount of money.

Your dividend gets sent to you in form of a dividend warrant. This is a document that functions like a check. You pay the dividend warrant into your bank account and when it has cleared, you can receive your money from the bank. The key to getting rich from your dividend is to understand the power of your dividend as a wealth creation tool.

If you receive and cash your dividend warrant, you are not making a very sensible financial decision. This is because you may be tempted to spend the money and chances are, you will. On the other hand, learn to re-invest your dividends and you are on the path to wealth already.

You need to have a dividend re-investment plan in place so that you can re-invest your dividends and create wealth for yourself in the process. To do this, the right moves to make are the ones discussed below:

Let Your Dividends Pile Up:

Dividends are paid, in most cases, more than once in a year. For this reason, don't rush to pick up your interim dividends, quarterly dividend or final dividend as soon as it has been paid. Let it all pile up into a substantial sum and it will be more valuable for re-investment.

Instruct your Broker:

Leave clear instructions with your stockbroker that you will prefer to re-invest all your dividends. For this reason, the money should not be sent to you. Why is this a great move? It is a great move because you cannot spend money that is not in your hands. So, keep your dividends out of reach and re-invest them without taking a dime for yourself.

Build Your Stockholdings:

You can build a large portfolio of stocks simply by re-investing your dividends in more stocks. It does not follow that you must use the dividend from a particular stock to buy more of that same stock. Simply re-invest your dividends in the stocks that will do you the most good.

For instance, General Electric has paid you a substantial dividend. You can simply re-invest that money and this time you buy Microsoft stocks. Remember that the cardinal rule of stock market investing is to put your money where it will do you the most long term good.

Finally, recognize the fact that the stock market may have its ups and downs. But, all considered, it is still a very viable form of investment to go into. Invest your money in stocks, re-invest your dividends and hold on to your bonus shares. This is how to re-cycle your way to wealth.

Learn more about this author, Emmanuel Osondu.
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