04-20-2012, 11:29 AM
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Lateral-g Supporting Member
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Join Date: Jul 2005
Location: Scottsdale, AriDzona
Posts: 20,741
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Quote:
Originally Posted by bdahlg68
And for those that reinvest the dividends, it automatically averages down your cost / share. As an example with STD, I own 600 shares at an average cost of $7.50. They pay a dividend on May-09-2012 of $0.2291 / share. At the current price of $6.34, I would get 21.681 shares. My new average cost per share is $7.235. Assuming a similar dividend and price / share next quarter, my cost / share could be under $7 without doing anything. This is where the yield vs. cost basis becomes exponential. Extrapolate this out 5 or 10 years.....
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EXACTLY
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