Tuesday, April 26, 2016

Dividends on Dividends on Dividends

The Richest Man in Babylon

Richest Man in Babylon is a great book about the power of safe investing and compounding.  As my readers know,  I have a portion of my portfolio dedicated towards dividend stocks, closed end funds and bond funds.  Not exciting, unless you like have money sent to you monthly without having to lift a finger!

On all my dividend stocks, as I do not need the income now as I am working, I simply reinvest the dividends and buy more shares. Again, not exciting, not sexy, but it is steadily building wealth.  Here is a table showing my collected dividends (with a secret multiplier) and the dividends on the reinvested shares:

 Row Labels   Sum of Cost   Sum of Value   Sum of Dividends   Sum of Gain 
 CSQ               32,830               31,910                          4,969               4,048
 AOD               28,480               26,516                          3,269               1,305
 O                 7,429               11,544                          1,381               5,496
 NTC               10,142               10,890                             588               1,336
 OIBAX               10,066                  9,564                          2,173               1,672
 SJT                 3,050                  3,005                                36                    (10)
 JQC                 2,081                  2,192                                35                   147
 REXI                     764                  1,178                                11                   425
 Grand Total               94,842               96,799                       12,461             14,419

So the way this reads is CSQ has paid $32,830 in dividends. Those shares I bought with the $32,830 are now worth $31,910.  But I have also  collected $4,969 in dividends on those shares, so  I have a net gain of $4,048.  Think of that, dividends on dividends.  That is great!


John Carney said...

posted two comments on 4/23/2016. Can you still believe in the Dividend approach? You seem like 10 years of data is not valid.

Marsh_Gerda said...


I do still believe, just a bit frustrated.

John Carney said...

Since the reboot I have had two bad spells of wanting to quit! It can change in a New York minute it seems.

jb said...

Dividends work. Outside of my MFI portfolio I own several stocks that have reasonably consistently raised dividends over the years. A recent one that i sold at a loss was Avon. I held it for over 20 years. But due to the dividends I ended up earning 8.4% annualized over that time. I can live with that, it is not a home run but it is a solid return. I know I could have seriously improved the returns if I sold the stock before that, but what can you do? Same deal for several other stocks that I still currently own. If the stocks suddenly go to zero my annualized returns are greater than 8% per year. I do also keep some of my money in the MFI strategy.