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Chowder
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PRIMARY OBJECTIVE: ... Income Replacement! Escape velocity is the speed that an object needs to be traveling to break free of the planet's gravitational pull and leave it without further propulsion. This portfolio is looking for the point where the income being generated can allow the holder of... More
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  • Dividend Reinvestment 9 comments
    Jan 17, 2013 5:09 AM

    In monitoring the Project $3 Million portfolio, I wanted to determine what effect the reinvested dividends were having on performance. This is a short term view.

    The portfolio was switched over to a Dividend Growth Model in 2009, and at that time, I decided to set it up for dividend reinvestment.

    I took a look at the companies where at least 12 quarters of dividends have been paid. Here's what I found.

    KO was purchased in Oct. 08 at 50 shares @$46.13 for a total investment of $2,316.49 including sales fees. The first 5 dividends were collected in cash, then from that point on, dividends were reinvested.

    The market value for KO end of Dec. 12 was $3,948.97. The position is showing a capital gain of 51.71%.

    Total dividends received have been $370.28. Dividends reinvested have accounted for 15.98% of that gain.

    CL was purchased in Nov. 09 at 23 shares @$78.88 for a total investment of $1,824.22 including sales fees. The market value for that investment end of Dec. 12 was $2,594.58 for a capital gain of 31.38%. Total dividends received have been $160.92 and that represents 8.82% of that gain.

    JNJ was purchased in Nov. 09 at 39 shares @$61.96 for a total investment of $2,426.41 including sales fees. The market value for that investment end of Dec. 12 was $3,038.20 for a capital gain of 12.79%. Total dividends received have been $296.27 and that represents 12.21% of that gain.

    ADP was purchased in Dec. 09 at 35 shares @43.90 for a total investment of $1,546.47 including sales fees. The market value for that investment end of Dec. 12 was $2,178.54 for a capital gain of 28.40%. Total dividends received have been $176.85 and that represents 11.43% of that gain.

    MO was purchased in Jan. 10 at 88 shares @$19.76 for a total investment of $1,748.82 including sales fees. The market value for that investment end of Dec. 12 was $3,240.93 for a capital gain of 50.84%. Total dividends received have been $455.20 and that represents 26.02% of that gain.

    project3million.blogspot.com/

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Comments (9)
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  • Chumpmenudo
    , contributor
    Comments (755) | Send Message
     
    Chowder:

     

    Congrats on your first article/instablog, keep up the good work. Heck, many of your comments could be full articles!

     

    Looking at KO, CL, JNJ, ADP, and MO on FAST Graphs back at time of purchase, I see KO was at fair value (PE basis), and all the others were purchased in an "undervalued" state. I think maybe you pay a bit more attention to valuation that you sometimes let on ;-)

     

    Chump
    17 Jan 2013, 06:58 PM Reply Like
  • Stephen J Melnykevich
    , contributor
    Comments (1325) | Send Message
     
    haha
    17 Jan 2013, 11:03 PM Reply Like
  • Chowder
    , contributor
    Comments (15419) | Send Message
     
    Author’s reply » Chump,

     

    I'll look for under value first. If it's not there, I'll settle for fair value.

     

    The companies I listed had at least 12 quarters of dividends. Some of the others, that have only 8 quarters of dividends, were purchased closer to fair value.

     

    I like to look at 3 year periods. So next year, I'll look at the next group of companies to see how the reinvested dividends are impacting them.

     

    chowder
    18 Jan 2013, 09:21 AM Reply Like
  • Chumpmenudo
    , contributor
    Comments (755) | Send Message
     
    FYI, I started a position in KMI on Monday, timing was good ;-)
    18 Jan 2013, 10:52 AM Reply Like
  • Smarty_Pants
    , contributor
    Comments (3253) | Send Message
     
    Congratulations on your first official 'article' Chowder!

     

    We all know that many of your comments are mini-articles in disguise but writing something as an original instead of as a response is a big step.

     

    I, for one, am glad to see you share more of your knowledge and insignts directly. Makes it easier for me to find those nuggets you always seem to dispense.

     

    Welcome aboard.
    19 Jan 2013, 11:04 AM Reply Like
  • Chowder
    , contributor
    Comments (15419) | Send Message
     
    Author’s reply » Thanks Smarty. I'm not going to get carried away though. I get quite a few PM's from people asking me to share thoughts on how to set up a dividend growth portfolio. I forget who I commented certain information to and it takes as long finding the information to copy and paste for others, than it does to type up a whole new comment anyway.

     

    I thought I would write a few instablogs, focusing on various aspects of dividend growth investing, based on how I use it, and then I could simply provide a link to a specific response.

     

    This way, I won't forget something I wish the reader to know. The information will be consistent.
    19 Jan 2013, 11:38 AM Reply Like
  • rnsmth
    , contributor
    Comments (3555) | Send Message
     
    Chowder has certainly been an source of good information for this investor. I appreciate having run into him.

     

    All of our dividend positions are set to reinvest. The portfolio is relatively new, so we are just starting to see those shares hit the accounts. The plan is to retire later this year and to keep reinvesting dividends until we decide we need to take some as income.

     

    We have several options on how to take some of our retirement pots of money, and it may make sense to take a portion of a couple of pots as 5 year payouts, which would increase income and allow us to keep rolling the dividends on the rest back into shares.

     

    We seem to be on the many small pots of money and we won't starve retirement plan :-)
    19 Jan 2013, 12:29 PM Reply Like
  • Stephen J Melnykevich
    , contributor
    Comments (1325) | Send Message
     
    Looking forward to your future articles whether they are instablogs or posted articles. I would buy your book if you wrote one so it's safe to say I'll read up anything you write.
    19 Jan 2013, 02:57 PM Reply Like
  • Chowder
    , contributor
    Comments (15419) | Send Message
     
    Author’s reply » I just this minute posted another instablog.
    19 Jan 2013, 03:58 PM Reply Like
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