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!
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4 comments:
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.
John,
I do still believe, just a bit frustrated.
Since the reboot I have had two bad spells of wanting to quit! It can change in a New York minute it seems.
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.
j
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