In my invest
At end of year 2008 the dividend champion list has 128 companies. The annual dividends that these companies pay range from $2.80 to $0.20. The average dividend for all of 128 companies is $1.17 and the average price is $35.71. In addition, there are 75 companies that pay at least pay $1 annual dividend. The average dividend of these 75 companies is $1.53 annualized.
Let us assu
· with my end goal of $30000, we will have to buy 600 shares per stock [30000/50].
· total funds needed = [50*600*$35.71] = $1,071,419 i.e. we can have this cash flow today with one million dollar.
Now let us do empirical optimization and make it simple.
Looking at dividend champion list, the average dividend for 75 companies (with at least $1 dividend) is $1.53 annually. Assu
· number of shares needed per companies = [30000/(50*1.53)] = 393
· total funds needed = [50*393*$35.71] = $701,780 i.e. now need $702K.
In this calculation, we still need to include dividend growth (positive effect), dividend reinvest
Let us consider that at begin of 2009; we have 50 shares of one company stock in our portfolio and each stock costs us $35.71. Each share has an average annual dividend of $1.53. Therefore, the total invest
· we will consider dividend growth rate of 8% every year;
· dividends are reinvested only once at the end of each year; and
· at the end of each year, we will appreciate the price of stock by 8%.
Let us do the math:
· at end of 2009, total dividend received $76.5, price of share $38.57
· beginning 2010, number of shares [(76.5/38.57)+50] = 51.984
· end of 2010, total dividend received $85.9, price of stock $41.65
· continuing this until end of 2020 – number of shares 76.706, total annual dividend $273.6.
· on our initial invest
Extrapolating this for 50 shares each in 50 companies
· total invested capital [50*50*$35.71] = $89,275
· total dividend cash flow [$273.6*50] = $13,682
· we have still not reached our end goal of $30,000 dividend cash flow.
Solving this backward, to achieve $30,000 dividend cash flow, we get:
· 110 shares for each company [total 50 companies*110 shares].
· total initial invest
As of today, if we invested $196,405 in 50 companies from dividend champion’s list (and bought 110 shares for each), we should be able to reach our 2020 goal. The yield on cost would be 15.3% [30,000/196,405]. This assu
Our first calculation of one million dollar ca
The purpose in this empirical calculation is to show (1) the significance of dividend growth and dividend reinvest