Dividend investing is intentionally including the concept that a company actively considers the dividend as part of their annual bills or responsibilities. Some dividend investors looking for consistency while others are looking for growth. Personally, I prefer companies who have increased their dividend over multiple economic conditions.
Unless I receive any additional dividend payments in the next 13 days, my dividend income has increased 50+%! But I am pretty bummed about it. How could that be possible? The problem is that the whole number is still damn unexciting. In 2012 my (very distant) perpetual income machine provided $458.18 in dividends for the year while in 2013 that number increased to $760.44. Enough for 2 dinners at a fancy steak house is not what dreams are made of.
My Current Holdings and Yield on Cost
The annual dividend rate of a security divided by the average cost basis of the investments. It shows the dividend yield of the original investment. If the number of shares owned by the investor does not change, the yield on cost will increase if the company increases the dividend it pays to shareholders; otherwise it will remain the same.
To calculate yield on cost for a stock, an investor must divide the stock’s annual dividend by the average cost basis per share and multiple the resulting number by 100 (to get a percentage).
So if I bought 10 shares of Stock ABC for $30/share and it had a dividend yield of 3% I could expect $9.00. Then lets say in 5 years the powers that be decided they liked a 3% yield but the stock had increased to $40 a share I could expect to receive $12.00. However I still only originally put in my original $30 so instead of a 3% yield I am actually receiving a 4% yield on cost.
As you could imagine the shares that had the greatest unrealized capital gains are likely to have a higher yield on cost. The reason is simple, your (my) original cost basis never changed other than small incremental dividend reinvestments.
My Actual Yield on Cost
|Symbol||Description||Cost Per Share||Current Yield (12-17-13)||YOC|
|AFL||AFLAC INC (Margin) (Margin)||$38.13||2.23%||3.88%|
|BDX||BECTON DICKINSON CO (Margin) (Margin)||$75.51||2.06%||2.91%|
|BMS||BEMIS COMPANY INC (Margin) (Margin)||$39.52||2.75%||3.54%|
|CB||CHUBB CORP (Margin) (Margin)||$60.28||1.89%||2.92%|
|CBSH||COMMERCE BANCSHARES INC (Margin) (Margin)||35.99||1.92%||2.33%|
|CTBI||COMMUNITY TR BANCORP INC (Margin) (Margin)||$33.97||2.94%||3.77%|
|DVY||ISHARES SELECT DIVIDEND ETF (Margin) (Margin)||$54.42||3.13%||3.97%|
|ED||CONSOLIDATED EDISON HLDG CO INC (Margin) (Margin)||$57.81||4.51%||4.29%|
|HCP||HCP INC COM (Margin) (Margin)||$43.93||5.82%||4.73%|
|IDV||ISHARES INTERNATIONAL DIVIDEND ETF (Margin) (Margin)||$31.06||No Yield???|
|JNJ||JOHNSON & JOHNSON (Margin) (Margin)||$68.22||2.89%||3.87%|
|KO||COCA COLA CO (Margin) (Margin)||$41.15||2.85%||2.72%|
|LEG||LEGGETT & PLATT INC (Margin) (Margin)||$25.96||4.07%||4.62%|
|MCY||MERCURY GENERAL CORP (Margin) (Margin)||$38.14||5.09%||6.50%|
|MMM||3M COMPANY (Margin) (Margin)||$92.17||1.99%||2.73%|
|NFG||NATIONAL FUEL GAS CO (Margin) (Margin)||$47.53||2.17%||3.20%|
|NWN||NORTHWEST NAT GAS CO (Margin) (Margin)||$45.24||4.3%||4.07%|
|PG||PROCTER & GAMBLE CO (Margin) (Margin)||$61.65||2.95%||3.89%|
|SDY||SPDR SER TR S&P DIVID ETF (Margin) (Margin)||$52.25||2.43%||3.06%|
|SON||SONOCO PRODS CO (Margin) (Margin)||$31.19||3.03%||3.98%|
|TGT||TARGET CORP (Margin) (Margin)||$64.55||2.77%||2.66%|
|VFC||V F CORP (Margin) (Margin)||$93.92||1.79%||4.47%|
|WAG||WALGREEN COMPANY (Margin) (Margin)||$33.15||2.22%||3.74%|
|WMT||WALMART STORES INC (Margin) (Margin)||$74.33||2.42%||2.53%|
I am receiving an average yield on cost of 3.75%. I shouldn’t be able to complain about that, but I obviously am since the whole number is still so low.
I think this exercise has given me new inspiration that the exercise I do every month with regard to trying to find an equity worth dumping $750 to $1,000 in is the best place for my cash right now (this may change in the future if I buy a B&M business or a rental property). Since it is currently the best place for cash right now it is my responsibility next year to get spending back under control so I can start putting a multiple of that number into the account every month.
*I should mention that the calculations in this post do not include roth IRAs, traditional IRAs or my 401(k).