Case study: how my dividends doubled for one holding in 3 years
Back in 2014 I bought a stock based on an article I saw on Fidelity about good dividend stocks. I hadn’t previously heard of the company, but bought a small position based on the recommendation in the article. Over the years I’ve seen the price go up and down. I sometimes curse myself in hindsight for not adding to the position, but I just checked the math and here’s what I found.
Reinvesting into extra shares per year
I bought just enough shares to create nearly 1 new share per quarter (and honestly this was mostly by accident). My initial position of 61 shares is now a little over 75 shares. This means that aside to getting additional dividends per year based on dividend payout increases, I’m also getting extra dividends per year by having more shares. So regardless of what happens to the stock price (let’s face it that raises and falls sometimes on what feels like a sneeze), I’m still accruing additional dividends. And if the stock price goes down when a dividend reinvests I’m sneaking in a larger added quarterly share.
Overall, the value of my position in this company has about doubled. My quarterly dividend has doubled fueled by both the added shares AND the increased dividend (which is about 50% increase since 2014).
Comparing the dividend payout with and without reinvestment
And check this out.
I started with 61 shares in this company with a quarterly dividend payout of about $6.50. A girl has to start somewhere!
Fast forward to today, the last quarterly dividend is came out to $13.40 because I now have about 75 shares.
If I did not reinvest the quarterly dividend payouts, my quarterly earnings would be about $11, because the base dividend payout has increased by 50%. So that means without reinvesting my quarterly payment would be 20% less!!
When it comes to dividend investing you need a little time and patience (or a larger starting point) to really start seeing the snowballing of dividend reinvesting take shape.