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I buy dividend stocks that increase their dividends year after year. When I initially buy these stocks, I am adding them to my portfolio at a particular dividend yield. For example, when I buy a $20 stock with a dividend of $1 my dividend yield is 5%. However, the stocks I purchase are dividend growth stocks that increase their dividends year after year. As a result of these dividend increases, I often find that my effective dividend yield on these stocks increases over time. Let me provide an example of what I mean.
Let’s go back to the example I provided above – I purchase a $20 stock with a $1 dividend for a yield of 5%. As this is a dividend growth stock, the stock raised its dividend now the dividend I receive is $1.25. My initial $20 investment is now yielding 6.25% ($1.25 divided by $20). This is the power of dividend growth – with very little effort from me I am now receiving more money (i.e. a higher yield) from my initial investment.
I keep track of the effective yield on my dividend paying stocks. More than anything, I enjoy to see the effect of a rising dividend on my own personal yield. In this series of posts here at The Dividend Guy, I am going to present this data to you and make the updated data available in the sidebar as the effective yield changes. Please be sure to check out the other links to see the effective yield I am receiving on other stocks in my portfolio.
Business Summary
A technology, media & financial services company, with products & services ranging from aircraft engines, power generation, water processing & security technology to medical imaging, business & consumer financing, media content & industrial products.
My Dividend Yield Data
| General Electric | ||||
|---|---|---|---|---|
| Original Yield | ||||
| Date | Ticker | Initial Buy Price | Initial Div Per Year | Initial Yield |
| Dec 28, 2005 | GE | $35.06 | $1.00 | 2.85% |
| Current Yield | ||||
| Average Price Per Share | Shares | Current Div Per Share | Current Yield | Annual Div’s Rec’d |
| $34.07 | 38.175 | $1.24 | 3.64% | $47.34 |
Table Explanation:
The table is dividend into two sections: Original Yield and Current Yield. Original yield presents the data from my initial purchase in the security and the resulting yield. The Current Yield is the yield I am receiving on my investment, given the growth in dividends as well as reinvested dividends. As I receive dividends they are reinvested into additional shares which is factored into this calculation. Essentially, I calculate the average share price for all shares and use this price to calculate the current yield (Current Yield = Current Dividend / Average Share Price).
Excellent post! I too love tracking effective yield (I call it yield on cost) and watching it grow over time.
Best Wishes,
D4L
Actually, if you bought 100 shares back in 2005, and you reinvested the dividends, your yield would have been higher than 3.64 % 😉
I recently bought a lot of stock with ge talk about a bargan this is easly a 40$ stock you cant ge a dividend price that is this this good with a rock solid compamy and trust it as it was your son or dauter. In todays rocky economy the way the stock market reacts to every little economic twitch its good to know that we can trust a company like GE that is not going anyware but up up and up ! P.S compare CD rates to the dividends that they offer its a no brainer.