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Double Your Money

October 25, 2017 By E.J. Smith

Investors pay too much attention to prices. That’s not investing. It’s trading. Sitting still and collecting dividends is investing. Let’s focus on the best part of dividend investing—dividend increases.

I wrote about my “survival stock” Hormel last week. The company began paying its dividend back in 1928, when cool Calvin Coolidge was president of the United States. It hasn’t looked back since. On Friday, Hormel released its quarterly earnings. Thanks to products like Spam, earnings were up 14% from a year ago, and revenues by 5%.

Hormel trades at around $28. It pays a quarterly dividend of 15 cents, or 60 cents a year, giving it a yield just over 2%. Five years ago, it paid an annual dividend of 30 cents, so it has doubled its dividend in five years for a CAGR of 15%. Let’s assume it can do the same over the next five years.

If the dividend is $1.20 in five years and the yield is still just over 2% a year, then the stock price would be around $60. Which means your reward for sitting still and collecting dividends is that you will double your money without paying any attention to daily price swings.

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E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com
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