Thursday, January 17, 2013

The Unlisted Gains

I was reviewing my investment account yesterday and found over $1500 of dividends paid during 2012 by Tesco, Vodafone, Marvell and Dell. This represents in this case about 5% of the total...and that's every year.     So if Tesco is up a but or down a bit, I still make good returns. In fact at the current rate over 10 years I will make $15,000 on an initial investment of $30,000 and I will still own the shares, valued (based on normal Dow annual rises) after 10 years at more than $40,000, making a total return of $55,000 a growth of over 80% or 8%pa fine by me. Dividends must be considered a key differentiation in acquiring stocks. Now there is a lot of debate in financial circles about dividend growth, and I am sure a company such as Kapstone whose shares do well and who regularly post dividend growth is a good company. But I think chasing these rare birds, while great, misses the point that a reliable dividend payer is a good deal as long as share prices do not fall.

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