Dividends are a form of passive income enjoyed by investors as a result of their stock’s good business performance. Some investors may opt to spend their dividends, as they consider it as a form of “bonus” which they can use on entertainment or travel. Others may choose to save their dividends in their bank account, thereby bolstering their emergency funds. But beyond that, you can also use what you receive in dividends to generate more income. What I would do though, is to park these dividends in a separate account known as an “opportunity fund”, which can be used for further purchases of even more dividend stocks. This is a concept known as “compounding“, and if you do it right, you could be on your way to an early retirement. Reinvesting your cash dividends Let’s look at a hypothetical scenario where a real estate investment trust (REIT) pays out a dividend of S$0.05 per unit....