I recently researched an energy company – Vitesse Energy LLC – whose business motto included the phrase “the velocity of capital compounding.” That idea caught my eye and applies to the power of compounding dividend or interest income. I like using the word “velocity” to indicate the speed at which gains can happen. By the way, that energy company will soon be added to the recommended portfolio for my Dividend Hunter service.

The mathematical formula for velocity is distance divided by time. For me, the velocity of investment income refers to how fast you can grow that income. The Rule of 72 gives us a quick estimate of how long it takes to double your money at a compounding interest rate.

Use the rule to divide 72 by the interest rate you want to use to get the number of years to double your money. For example, using 6% and dividing 6 into 72, the rule tells us that doubling your money would take 12 years. The income or dividends earned on that money would also double in 12 years. Obviously, if you can earn a higher yield, the velocity of income growth will be faster. Earning 10% will double your income in a little over seven years.

My Dividend Hunter service includes a recommended portfolio of high-yield investments. The current average yield is around 10%. I am comfortable with using that as a compounding yield.

While 10% from dividends or interest is a great return, I am sure you would love to see your income grow at an even faster velocity. Here are some tactics to increase the income from your investments more quickly:

The easiest is to make regular added investments to your investment account. That is how most people grow their wealth. For example, if you earn 10% on your income and add 10% in new money each year, your account and income will grow by 20% per year.

Investing in high-yield opportunities will mean you own exchange-traded stocks and funds. The prices of these investments will go up and down with the broader market. One great way to improve your income velocity is always to stay invested and work to buy more shares during market downturns. You will buy cheaper shares at higher yields, growing your income even faster as the market recovers.

There are income stocks (and ETFs) that regularly increase their dividends. These are great to include in your income-focused portfolio and definitely add velocity!

Growing an income stream takes planning and picking good investments. There is a lot of “crap” in the high-yield world. It also takes patience. Your income growth velocity will start slowly and then accelerate nicely if you stick to the plan.