Thread: Investing 102
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Old 11-15-2017, 10:27 AM
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GregWeld GregWeld is offline
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Quote:
Originally Posted by dhutton View Post
How do you deal with shrinking dividends as a percentage when stock prices rise? I started out with stocks that pay high dividends but the dividend percentage has shrunken over time. Do you sell them to buy stocks with higher dividends or do you hold them and live with a smaller percent on a higher value portfolio?

Hope this makes sense.

Thanks,
Don


I think you're doing the math incorrectly!! Or at least I hope you are!


The dividend should only be calculated on YOUR COST basis. To do this --- divide the ANNUAL dividend paid - by your cost per share....

DON'T look at what it's paying currently on the price it's trading at today. What should really be happening is that your dividend PERCENTAGE should increase as they raise the payout - and your cost stays the same (unless you're adding to the shares at which time you need to calculate your new cost basis).

Does this make sense?
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