The Power Of Dividends & Time

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The other day I decided to check in on one of my favorite things, my Phillip Morris (Altria) stock (MO). When I was younger, I used to think that I would just invest all my money into dividend producing stocks and I would be rich. But, because of dumb financial mistakes and bills, I ended up cashing out almost all of my investments. I did, however, leave myself one share of one stock just to see what it would do over time though. And that one stock ended up being Phillip Morris (MO).

Altria Group LogoPhilip Morris International Logo

I have held one share of MO since December 13th, 2002, when I purchased it for $33.67. Since then, I’ve held on to it just for fun to see what it would do and see what I can learn about stocks from it. When I checked on it on July 20, 2015, the value was worth $174.74. Every quarter, that stock continues to pay a nice dividend and I have it set to reinvest those dividends to purchase more stock. This is managed through Computershare, which allows me to invest directly with the company. Originally, I actually had them send me the stock certificate just so I could see what it looked like. That’s how I ended up with computershare.

Some quick calculations that I did are quite staggering to me.

$33.67 turned into $174.74 in 13 years.

That’s $141.07 in profit.

That’s $10.85 a year in growth

That’s an average annual return of 32.22%

Not only that, but I now have about 1.3 shares of MO and in 2008, they did a spin off of Phillip Morris International (PM), so I ended up with a share of that as well. With dividends reinvested, I now have 1.29 shares of that.

My purchasing power is growing each quarter as these stocks pay more dividends and purchase more stock for me automatically.

in the past year between these two stocks, I’ve made $6.40 in dividends. That makes my original yield on my $33.67 stock price a whopping 19% before the stock even does anything for the year! That is amazing to me!

The factors that I don’t have data on that would make this deal even sweeter is that during the time that I owned MO, they also spun off Kraft and Annheiser-Busch, so I ended up with stock in those as well, but I did cash those out and don’t remember how much they were worth.

Lessons I’ve Learned From Investing In MO

Phillip Morris will always have a special place in my investing heart due to how much I learned about single stocks since I started owning it.
  • I have been on the roller coaster ride with this stocks watching the ups and downs.
  • I learned how class action lawsuits can have a big effect on the company
  • I learned the power of the reinvestment of dividends
  • I learned what a stock certificate looks like
  • I learned what happens when a stock splits, spins off other companies, raises the dividend, gives out proxy materials for meetings
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Steven Goodwin

Owner/Blogger/Consultant at MyFamilyOnABudget
Steve Goodwin, a stay-at-home dad of two girls is passionate about finances and is helping others just like you get out of debt and build wealth handling money God's way. His goal is to inspire people like you to gain control of their finances by destroying debt and building wealth using their cash flow.
Posted in Finances, Investing, Wealth Building.

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