Dividend Stocks

Investing In Stocks For The Sake Of Cash Flow

High Dollar DRIP Example: 7% Annual Dividend Increase



The following example assumes the following:

  • Starting value of $1
  • $500 contribution each month
  • Starting dividend yield of 2.5%
  • Annual increase in dividend of 7%
  • Annual stock appreciation assumes 7% (same as dividend increase rate)
Year Invested: Reinvested
Dividends
Total
Cost Basis:
Total
Value:
1 $5,501.00 $55.25 $5,556.25 $5,747.74
2 $11,501.00 $268.11 $11,769.11 $12,595.25
3 $17,501.00 $653.75 $18,154.75 $20,101.32
4 $23,501.00 $1,228.77 $24,729.77 $28,329.29
5 $29,501.00 $2,011.40 $31,512.40 $37,348.57
6 $35,501.00 $3,021.60 $38,522.60 $47,235.28
7 $41,501.00 $4,281.25 $45,782.25 $58,072.85
8 $47,501.00 $5,814.35 $53,315.35 $69,952.71
9 $53,501.00 $7,647.19 $61,148.19 $82,975.11
10 $59,501.00 $9,808.61 $69,309.61 $97,249.93
11 $65,501.00 $12,330.20 $77,831.20 $112,897.63
12 $71,501.00 $15,246.61 $86,747.61 $130,050.25
13 $77,501.00 $18,595.80 $96,096.80 $148,852.50
14 $83,501.00 $22,419.39 $105,920.39 $169,463.06
15 $89,501.00 $26,763.02 $116,264.02 $192,055.83
16 $95,501.00 $31,676.69 $127,177.69 $216,821.45
17 $101,501.00 $37,215.24 $138,716.24 $243,968.89
18 $107,501.00 $43,438.75 $150,939.75 $273,727.22
19 $113,501.00 $50,413.10 $163,914.10 $306,347.56
20 $119,501.00 $58,210.51 $177,711.51 $342,105.13
  • What Are DRIPs?

    DRIPs refer to Dividend ReInvestment Plans where investors often buy stocks directly from the company for little to no fees and reinvest dividends automatically. DRIPs can be a very effective and low-cost way to build positions in dividend stocks over time.
  • Are DRIPs For You?

    Dividend Reinvestment Plans are great for the following reasons:

    1. Easy, automatic investing

    2. Automatic reinvesting of dividends

    3. Low fees

    4. Easy way to get used to investing in individual stocks