Tuesday, October 18, 2011

Why I Absolutely Love Dividends...

First, this shirt is way over the top, and is definitely too much for me.  (It was in the first row of pictures when I googled "love dividends").  Now, that said, however, like many of the readers of this site, we do in fact love dividends.  That's why we blog about them and invest in companies that offer them and use them in specific ways in our investment strategies. 

This article, referencing a specific example from my life and my portfolio highlights exactly why, like so many of us, I love dividends...........because when you think about it, we do love them don't we?...

As many of you know, I was gone for the month of September doing some intensive miltary training.  As a result of this training, I was without cell phone and without internet connectivity for the entire month (take a few minutes to imagine that please).  Consequently, my portfolio was on it's own - alone and unafraid.  Hopelessley and absolutely at the mercy of Mr. Market in a tumultous time, to say the least.

Running some quick numbers, the DOW closed on the 1st of September at 11,493 after a "bad day" of losing 119 points.  When I returned and checked the internet on September 28th, the DOW had closed at 11,010.  Down approximately 480 points from when I left and dangerously close to dipping back in the 10,000s. 

I couldn't believe it.  My investments, that track the DOW somewhat closely (given that most are large cap, blue chip stocks; (though not trying to brag I have beat the market for almost 2yrs in a row now)), had done nothing but lose money all month.  What a joke.  A completely wasted month.  Or was it?

Here's why I love dividends so much, and I'll use the month of September as a microcosmic example:

1) I didn't have the ability to invest - no access to internet or phone
2) I didnt have the ability to invest - no extra capital, (even if I did have internet/phone access)
3) My portfolio as a whole, like most, lost money

Yet despite all of the reasons above, my personal porftolio of dividend stocks generated the following:

1) $174 of income.  Paid to me in hard cash.  That I didn't even know I earned.
2) My reinvestment settings allowed me to invest $174. That I didn't even have the ability to invest because of no internet access and no capital.
3) I dollar-cost-averaged $174 into stocks that bought mores shares at decent prices, that will eventually pay more dividends themselves.

Bottom line - Awesome.

Without any money, any internet access, or any of my own doing, my portfolio invested $174 this month.  I've said it before, and I'll say it again - what a blessing. 

Hopefully you enjoyed my analysis, and found it somewhat insightful.  If nothing else, hopefully it encouraged you to stay the course that dividend investing requires.  It's a long road.  I'm encouraged to think that someday if I stick with it I'll accomplish my mission statement because of month's like September.

Thanks for reading,



  1. Ha. Good stuff. I love dividends as well ;)

  2. I know some guys prefer not to DRIP, but for me personally, I love it. The dollar cost averaging aspect, the reinvest at no charge, and the additional shares every quarter/month to me is very appealing.

  3. Chris,

    I think you hit the three great benefits of DRIP investing. Let the snowball roll baby..


  4. DP,

    First of all, welcome home. Hope they didn't rough you up too much with all that military training. Thanks for you service.

    You had a complete blackout on all your internet and communications. Incredible! I can't imagine not checking my portfolio at least every few days. I do it daily as it is.

    Congrats on September. $174 is nothing to sneeze at...and you didn't have to lift a finger to make any of that happen. Awesome indeed!

    God Bless!

    Income Pirate

  5. Great stuff man!

    Collecting $174 for doing nothing sounds pretty great to me. That t-shirt is sweet! Haha.

    Keep up the great work.

  6. I have a large dividend paying stock portfolio and have left it alone for 6 months at a time and nothing much has happened to it. I think that dividend paying stock is less volatile than other stocks.

  7. IncomePirate, Mantra, and SPBrunner,

    Thanks for the comments. Great having folks like you to discuss dividend investing with. Please keep in touch!


  8. I am a bit worried about the market going further down, so lately I have been my dividends go to cash. But I am still getting some income.