The Spanish began settling in the Caribbean, primarily the islands of Hispaniola, Cuba, and Puerto Rico beginning at the end of the fifteenth century. There are several reasons why the Spanish settled there. The most simplistic one is that those islands happened to the place where early explorers of Spain happened upon. It is plausible that if Christopher Columbus had sailed elsewhere, the focus of Spanish colonization in the New World would have been different.
More to the point, the Spanish began their settlements in the Caribbean because they hoped to use the islands as strategic locations as they built a global trading empire. Initially, it was thought that these islands were close to the sources of lucrative spices and precious metals in East Asia. These hopes vanished after they began to better understand the true nature of geography in the Western Hemisphere.
However, this did not stop the influx of Spanish settlers. In 1502, Nicolás de Ovando founded the first significant Spanish settlement in the region on Hispaniola. The goal of this settlement was to extend Spanish dominion in the region and to further develop the area as an economic asset of Spain. Over the next decade, the Spanish established more settlements throughout the Caribbean. They began growing cash crops, such as sugarcane, that further enriched the Spanish Empire.
After the conquest of Mexico, the Spanish Caribbean became a point of transit for the vast riches pillaged from the American mainland. Spanish galleons loaded up with gold and silver from Mexico in the ports of Santo Domingo and Havana and headed back to Spain.
At first, the Spanish had a monopoly of colonialism in the region. However, in the early seventeenth century, the French, English, and Dutch began making more incursions in the Caribbean. To counter this, the Spanish sent even more settlers to the region to strengthen their colonial holdings there.