Money and Finance
Dividends. I love them. One of the reasons that dividends are so awesome is that they provide a positive portion of return that can't be taken away. If you receive a $50 dividend in cash that's a positive return. Forever. The company won't take it back out of your account if they decide they want some more cash. It can never turn into a negative return unlike the capital gains portion of total return which is subject to the whims of the markets. That little bit of return that you get from each payment may not seem like much in isolation but they add up over time.
What I'm talking about is called the payback period. It's quite simple to calculate as you just divide the cumulative dividends you've received from a company into the total capital you've invested. Simple as that. If a company yields 3% you get a 0.75% return with each payment. So in 33.3 years you'll receive your original investment back through the dividend payments.
However, something magical happens when you combine dividend payments with a company that also grows that dividend. Just for an example say that 3% yielding company raised the dividend by 10%, now with each and every payment going forward you're receiving 0.825% of your investment back. You already received 3% of your investment back the first year and the second year you'll receive 3.3%.
Read more »
- Dividend Growth Investing At Work - 2 More Increases
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends. Just for owning a small portion of the companies. Not going and doing R&D for new products...
- Walmart Moves Dividend Forward
Walmart (WMT) moved their next dividend payment forward from early January 2013 to December 27, 2012. They did this to be help shareholders receive the payments before potential tax increases due to the fiscal cliff. There's too many tax...
- Recent Sell
This afternoon I decided to go on and sell out of my position in Pfizer (PFE). I sold all shares at a price of $23.79 which netted a gain of $114.24 on the position. The shares had a YOC of 4.71% which was nice and they were due for a dividend increase...
- Little Green George Washingtons
I believe that in the long term dividend growth stocks will provide solid returns while being less volatile than the market in general. It's not flashy and it's not a get rich quick scheme. However, when 40% of the long term total return on stocks...
- Sell: Bbl, Souhy, Nsc
On Monday, December 14, 2015, I sold the following 80 shares of BBL at $20.65 for a total of $1,644.97.34 shares of SOUHY at $3.51 for a total of $112.34.11 shares of NSC at 90.10 for a total of $984.09. In return I received $2,756.91. I lost -$236.76...
Money and Finance
Why Dividends Matter: The Calm in the Storm
Dividends. I love them. One of the reasons that dividends are so awesome is that they provide a positive portion of return that can't be taken away. If you receive a $50 dividend in cash that's a positive return. Forever. The company won't take it back out of your account if they decide they want some more cash. It can never turn into a negative return unlike the capital gains portion of total return which is subject to the whims of the markets. That little bit of return that you get from each payment may not seem like much in isolation but they add up over time.
What I'm talking about is called the payback period. It's quite simple to calculate as you just divide the cumulative dividends you've received from a company into the total capital you've invested. Simple as that. If a company yields 3% you get a 0.75% return with each payment. So in 33.3 years you'll receive your original investment back through the dividend payments.
However, something magical happens when you combine dividend payments with a company that also grows that dividend. Just for an example say that 3% yielding company raised the dividend by 10%, now with each and every payment going forward you're receiving 0.825% of your investment back. You already received 3% of your investment back the first year and the second year you'll receive 3.3%.
Read more »
- Dividend Growth Investing At Work - 2 More Increases
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends. Just for owning a small portion of the companies. Not going and doing R&D for new products...
- Walmart Moves Dividend Forward
Walmart (WMT) moved their next dividend payment forward from early January 2013 to December 27, 2012. They did this to be help shareholders receive the payments before potential tax increases due to the fiscal cliff. There's too many tax...
- Recent Sell
This afternoon I decided to go on and sell out of my position in Pfizer (PFE). I sold all shares at a price of $23.79 which netted a gain of $114.24 on the position. The shares had a YOC of 4.71% which was nice and they were due for a dividend increase...
- Little Green George Washingtons
I believe that in the long term dividend growth stocks will provide solid returns while being less volatile than the market in general. It's not flashy and it's not a get rich quick scheme. However, when 40% of the long term total return on stocks...
- Sell: Bbl, Souhy, Nsc
On Monday, December 14, 2015, I sold the following 80 shares of BBL at $20.65 for a total of $1,644.97.34 shares of SOUHY at $3.51 for a total of $112.34.11 shares of NSC at 90.10 for a total of $984.09. In return I received $2,756.91. I lost -$236.76...