Comments on: The Power of Reinvested Dividends – It’s Amazing! http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 11 Feb 2012 20:32:19 +0000 hourly 1 http://wordpress.org/?v= By: Leslie http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-312693 Leslie Wed, 21 May 2008 23:23:00 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-312693 From personal experience, dividend reinvestment can truly be a beautiful thing. My grandfather invested $1000 in a utilities company for me when I was five years old and set it up for dividend reinvestment. Twenty-five years later, that stock has helped me get through both undergrad and graduate degrees, put a down payment on a house, and go on my dream honeymoon to Belize. And it's still going strong. As for the taxes, I don't know how our accountant does it exactly (that's why we have her), but she doesn't seem to have any problems with it. From personal experience, dividend reinvestment can truly be a beautiful thing. My grandfather invested $1000 in a utilities company for me when I was five years old and set it up for dividend reinvestment. Twenty-five years later, that stock has helped me get through both undergrad and graduate degrees, put a down payment on a house, and go on my dream honeymoon to Belize. And it’s still going strong. As for the taxes, I don’t know how our accountant does it exactly (that’s why we have her), but she doesn’t seem to have any problems with it.

]]> By: Brad http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-312149 Brad Wed, 21 May 2008 06:04:08 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-312149 "I’d be interested to know how you came up with those numbers." JLP _____ ...I used the free online calculator at http://www.bygpub.com/finance/TaxFixedAmtCalc.htm Unlike most basic financial calculators, it permits both tax & inflation factors for future-value interest computations. You can plug in your own tax/inflation rate numbers, or use their suggested nominal rates. State and local taxes may apply as well as Federal, depending where one's legal residence is. “I’d be interested to know how you came up with those numbers.” JLP

_____

…I used the free online calculator at
http://www.bygpub.com/finance/TaxFixedAmtCalc.htm

Unlike most basic financial calculators, it permits both tax & inflation factors for future-value interest computations.

You can plug in your own tax/inflation rate numbers, or use their suggested nominal rates.

State and local taxes may apply as well as Federal, depending where one’s legal residence is.

]]> By: Bob Evans http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-312111 Bob Evans Wed, 21 May 2008 05:34:01 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-312111 It is not that hard to keep track of all you need is a simple spreadsheet or you can use a portfolio tracking system from AOL, Yahoo, Etc. For those of s that do not have $10,000 on hand Direct Stock Purchase Plans are great. I found about DSPP a little over 2 years ago. Some examples are: Kellogs (K) minimum first time investment $50 out of that is a $10 one time set up fee the other $40 goes to stock. After that you can invest as little as $25 per purchase and the money goes 100% into stock, Kellogs pays all of the fees. Exxon Mobil (XOM) minimum first time investment $250 Exxon pays the set up fee, and after that you can invest as little as $50 per investment and Exxon pays all of the fees. Kellogs has had dividend increases the last 3 years while Exxon has had increases the last 10 years, and both companies have been paying Dividends 80 years or more. I found this to be such a great thing that I have listed over 150 companies on my web site at www.aplussrc.com that offer direct purchase plans and the best thing is its FREE. I have also included links to the company home pages, prospectus, and enrollment forms. I have been buying direct for the last 2 years and my per share cost is down to .34 a share verses the .86 a share I had when I was using a broker and I am doing it $50 at a time instead of $1000 at a time. It is not that hard to keep track of all you need is a simple spreadsheet or you can use a portfolio tracking system from AOL, Yahoo, Etc.

For those of s that do not have $10,000 on hand Direct Stock Purchase Plans are great. I found about DSPP a little over 2 years ago.

Some examples are:
Kellogs (K) minimum first time investment $50 out of that is a $10 one time set up fee the other $40 goes to stock. After that you can invest as little as $25 per purchase and the money goes 100% into stock, Kellogs pays all of the fees.
Exxon Mobil (XOM) minimum first time investment $250 Exxon pays the set up fee, and after that you can invest as little as $50 per investment and Exxon pays all of the fees.
Kellogs has had dividend increases the last 3 years while Exxon has had increases the last 10 years, and both companies have been paying Dividends 80 years or more.

I found this to be such a great thing that I have listed over 150 companies on my web site at http://www.aplussrc.com that offer direct purchase plans and the best thing is its FREE. I have also included links to the company home pages, prospectus, and enrollment forms.
I have been buying direct for the last 2 years and my per share cost is down to .34 a share verses the .86 a share I had when I was using a broker and I am doing it $50 at a time instead of $1000 at a time.

]]> By: Kitty http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311992 Kitty Wed, 21 May 2008 00:10:02 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311992 Dave is right. Calculating base price is quite easy. You are interested in the total base price, not the details for each purchase. 1. Separate short-term purchases - this shouldn't be that tough, as there are only few of them. 2. For long-term: get the number of long term shares, multiply by purchase price - this is what you got for long term sale. For the base price don't bother with details, go by total amount of money you invested over the years plus commissions for the original purchase and for the sale. The total amount of money you invested would include a) your original purchase b) dividends you received over the years. If you kept your past tax returns or/and end-of-year brokerage statements, it wouldn't be that difficult. Put "various" for the purchase dates. I've had some experience with reporting sales of ESPP stock which is even more complicated. "If you are going to make a partial sale of a stock, you have different valuation methods to choose from, I believe" It is FIFO unless you specify in advance to your broker which shares you are selling and have a broker send you a written note with the sale statement confirming which shares are sold. Dave is right. Calculating base price is quite easy. You are interested in the total base price, not the details for each purchase.
1. Separate short-term purchases – this shouldn’t be that tough, as there are only few of them.
2. For long-term: get the number of long term shares, multiply by purchase price – this is what you got for long term sale. For the base price don’t bother with details, go by total amount of money you invested over the years plus commissions for the original purchase and for the sale. The total amount of money you invested would include a) your original purchase b) dividends you received over the years. If you kept your past tax returns or/and end-of-year brokerage statements, it wouldn’t be that difficult. Put “various” for the purchase dates.

I’ve had some experience with reporting sales of ESPP stock which is even more complicated.

“If you are going to make a partial sale of a stock, you have different valuation methods to choose from, I believe”
It is FIFO unless you specify in advance to your broker which shares you are selling and have a broker send you a written note with the sale statement confirming which shares are sold.

]]> By: JT http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311928 JT Tue, 20 May 2008 22:22:13 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311928 First Trade Securities, an online broker, reinvests dividends for free. Also if you invest through a Direct Stock Purchase plan with the company you want to buy stock in, they will usually reinvest dividends for free. First Trade Securities, an online broker, reinvests dividends for free. Also if you invest through a Direct Stock Purchase plan with the company you want to buy stock in, they will usually reinvest dividends for free.

]]> By: JLP http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311770 JLP Tue, 20 May 2008 17:45:03 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311770 Brad, I'd be interested to know how you came up with those numbers. Brad,

I’d be interested to know how you came up with those numbers.

]]> By: Brad http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311769 Brad Tue, 20 May 2008 17:41:42 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311769 ...not so amazing with taxes & inflation factored in -- you end up with only about $32K (..not 75K). There are MASSIVE differences between the taxed and non-taxed numbers after 20 or 30 years. And inflation is now getting as bad as taxes. The "power-of-compounding" also works on these negative factors, unfortunately. …not so amazing with taxes & inflation factored in — you end up with only about $32K (..not 75K).

There are MASSIVE differences between the taxed and non-taxed numbers after 20 or 30 years.

And inflation is now getting as bad as taxes.

The “power-of-compounding” also works on these negative factors, unfortunately.

]]> By: JimmyDaGeek http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311666 JimmyDaGeek Tue, 20 May 2008 14:54:13 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311666 For record keeping, a simple spreadsheet or document table will do the job. Things do get complicated when splits/stock dividends/takeovers are involved. Then it helps to have Quicken or Money and download the information monthly. If you are going to make a partial sale of a stock, you have different valuation methods to choose from, I believe. And once you choose a method, you must stick with it until that asset is completely sold. The IRS, http://www.irs.gov, has Publications 550, 551, & 552 that discuss these topics, as well as Topic 409 For record keeping, a simple spreadsheet or document table will do the job. Things do get complicated when splits/stock dividends/takeovers are involved. Then it helps to have Quicken or Money and download the information monthly.

If you are going to make a partial sale of a stock, you have different valuation methods to choose from, I believe. And once you choose a method, you must stick with it until that asset is completely sold. The IRS, http://www.irs.gov, has Publications 550, 551, & 552 that discuss these topics, as well as Topic 409

]]> By: Frauhecker http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311664 Frauhecker Tue, 20 May 2008 14:50:04 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311664 This is exactly how my Father was able to retire at 60, even with 5 kids. Actually, he wasn't that savvy - he didn't know what to do with the blue chips he inherited, so he just put them on reinvestment and let them sit for 30 years. Following his lead, I'm letting my Exxon sit as well. This is exactly how my Father was able to retire at 60, even with 5 kids. Actually, he wasn’t that savvy – he didn’t know what to do with the blue chips he inherited, so he just put them on reinvestment and let them sit for 30 years. Following his lead, I’m letting my Exxon sit as well.

]]> By: Jeremy Bettis http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/comment-page-1/#comment-311643 Jeremy Bettis Tue, 20 May 2008 14:17:45 +0000 http://allfinancialmatters.com/2008/05/19/the-power-of-reinvested-dividends-its-amazing/#comment-311643 Are there any publicly available charting tools that will show dividend yields along with price? I find it very frustrating when trying to compare mutual funds, when you can't see the dividends. I had one mutual fund where the 10 year price level was almost 0%, but the 10 year dividend yield was over 12%. But the charts (google, yahoo finance etc) all showed that fund as a big loser. Are there any publicly available charting tools that will show dividend yields along with price? I find it very frustrating when trying to compare mutual funds, when you can’t see the dividends. I had one mutual fund where the 10 year price level was almost 0%, but the 10 year dividend yield was over 12%. But the charts (google, yahoo finance etc) all showed that fund as a big loser.

]]>