A Long Term Example of Investing in Dividend Stocks

My fellow investor, you are about to witness the power of investing in dividend stocks. Warning... this may shock you!

The following is an example of what you would have earned if you had invested $10,000 into Johnson & Johnson in 1980 and held your shares until 2011 while reinvesting all of your dividend payments.

Johnson & Johnson is a diversified health care company that sells well known brands such as Tylenol, Band-Aid, Listerine, Neosporin, Clean & Clear and Neutrogena (among others) across the globe. They have been in business since 1886 and have increased their dividend payments to shareholders every year for the last 49 years! This has earned them a spot in the Dividend Achievers Index.

For simplicity sake, the following example excludes brokerage fees on original shares purchased as well as from reinvested dividends. The dividends were reinvested when they had accumulated to at least $1000. The original shares were purchased in January of 1980 and the dividends were reinvested in and around December 1st every year.

Can you say amazing investment?! Your original $10,000 investment would have grown to $735,751.50 and that’s without investing any new money... just reinvesting the dividends. This is the power of dividend growth investing!

Now unfortunately past performance does not reflect future returns. However, if the company has an amazing history of increasing their dividends every year similar to Johnson & Johnson’s above, a clean balance sheet, solid management and a plan for future growth, then there’s a good chance that they will continue to perform well in the future.

So there you have it... a real life example of dividend stock investing. Pretty powerful stuff if you ask me!

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