Before we wade into this nerd-fest of a post, I need to tell you that I am in no way a financial expert and that this information should not be construed as investing advice. It’s purely for entertainment purposes.
Because what’s more entertaining than dividend investing? Am I right?
I’ve long loved the idea of dividend stocks, because — to me — they feel like owning rental real estate. You can read here how my crazy mind makes that leap.
So two years ago, when I received $5000 in 401(k) money from a former job, I decided to invest it in individual dividend stocks.
Most of our retirement investments are in mutual funds and we’re good with that. But this money felt like the chance for me to have a little investing fun, because the amount wasn’t significant enough to make or break our retirement plans.
Still, I didn’t want to just throw darts at a board, so I did a little research and decided to choose five different stocks from the Dividend Aristocrats list. The Aristocrats are stocks that have raised their dividend in each of the last 25 years. In other words, they may not pay the biggest dividends, but they pay consistent ones.
I liked that.
I chose the following five stocks: Abbott Laboratories (ABT), McDonald’s (MCD), Johnson & Johnson (JNJ), Wal-mart Stores (WMT), and Coca-Cola (KO). I divided my investment relatively evenly among the five. (Again, you can see the method behind my stock-picking madness here, if you’re interested.)
My goal was to leave these investments alone for the long haul, and I must have taken that to heart because I haven’t checked on their performance since this time last year. So it’s time for another update.
Here’s what the stocks have done over the last year. All the dividends have been reinvested.
Something a little strange happened with Abbott, and — as near as I can tell — the stock actually divided into two different companies at the beginning of 2013. As a result, I now own 17 shares of AbbVie, Inc. and 17 shares & change of Abbott Labs. It’s kind of like a stock split, and yet not, because it’s two different companies. It appears to be a stock spinoff. Interesting.
Taken together, the share prices of the two companies total $77.26. I paid $49.90 for my shares of ABT back in 2011, so that seems to be a 27% return. I’ve also earned $50.53 in ABT/ABBV dividends, which are worth $62.67 today.
I guess I need to decide if I want to keep my ABBV shares, or sell them and invest them back into ABT, or possibly something else. Sounds like a little research is in order.
I bought KO at $67.36 and it’s worth $38.48 today, which would seem like a loss, but the stock split in 2012, so I now own twice as many shares as I started with. If I’m doing my math right, that’s a return of 14.25%. I’ve been paid $58.44 in dividends over the two years, which are worth $60.16 – or about a 1 1/2 shares of the stock – today.
Johnson & Johnson
The price of JNJ stock has risen from $62.85 when I bought it 2 years ago, to $89.23 today, an increase of almost 42%. During that time I’ve been paid $74.51 in dividends, which are worth $95.57 today. I’m loving JNJ!
Overall, the price of the MCD stock has risen 11.7% since I purchased it in August, 2011. The price then was $85.57 and the price now is $95.60. During that time I’ve been paid $70.51 worth of dividends, which are worth $71.36 today. So that equates to about 3/4 of a share of stock at today’s prices.
Walmart’s stock price has gone from $50.83 when I bought it, to $73.45 today. That’s a 44.5% return, which is great, but almost all of that came during the first year. The stock today is barely above where it was last year at this time. Dividends paid to me during that time totaled $60.07, and are worth $66.89 today.
The Big Wrap-up
Overall, the total of my investment has gone from $5002.54 in August of 2011 to $6648.32 today. I realize that the stock market has been on a pretty good ride during that time, but it’s still fun to see these numbers climbing.
I need to decide what to do about the whole ABBV/ABT thing, but I plan to keep the rest of my investments the same. They’re all still on the Aristocrats list for 2013 and I still like them for the reasons I did back in 2011.
I do think I’ll make it a goal to follow the news with these stocks a bit more in the year ahead, however.
Are you a dividend investor?