Investing 102

[bdahlg68]

Originally Posted by GregWeld

Seriously -- that's where getting a dividend REALLY REALLY helps - because it keeps pounding money in your pocket... where a pure growth stock does not. If I've learned ANYTHING over the last 30 years -- it's that.

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.....