About the time I was born over 70 years ago, GE stock was about $35 per share, the same as now. But one share bought then would be 288 shares now due to stock splits. That represents an average gain of 8.45%, a bit less than the gain of the market average over that period. $1000 invested in GE stock then would be worth $288,000 now. But, the stock also paid dividends through that period. If the average dividend was 3%, it would net 2% after taxes. If the 2% were reinvested in GE stock, that would give a total yield of 10.45%. The value of an initial $1000 investment would now be $1,051,000. (This is approximate since the market had ups and downs that would affect the number of shares bought, nevertheless it is a good approximation.) Of course, when I was born my Dad only made about $1000 per year (in a good year), so he didn't have $1000 to invest for me. In conclusion, it appears that reinvesting dividends is a good idea. I do that.
posted by James Williams | 7:09 AM
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My Arab friend was once in the desert with some Bedouins. He was with an American guy who got very sunburned on the backs of his knees because he took off the bottoms of his convertible pants/shorts. The Bedouins laughed at his pathetic uselessness and started to call him, "Jimmy Carter" and a derogatory word for gays, as an insult.
Later that night, he got stung on his upper butt crack by a scorpion, because he wouldn't pour oil around himself as he slept, as the Bedouins did, because he was afraid it would burn his sunburn blisters.
The Bedouins laughed again, and made really insulting remarks that I will not repeat because you run a classy and tasteful blog. But that oughta tell ya what they think of Jimma Carta in the middle east.
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