How Long Till Dividends Pay Me Back My Investment?
Dividend Return on Investment Real Time Tracker
Now you can easily discover how long it will take your company's dividends to pay you back your original investment.
Investors have long sought a tool that would enable them to quickly discover how long each of their prospective investments, or current investments, will take to return 100% of their original company investment amount, through dividends alone.
I have created a new real time digital tool that helps to compare different stock investments to determine which would be the most efficient use of capital to obtain quicker payback of your original investment amount.
An integral part of buying a business or piece of property is determining how long the payout will take to break even on your investment.
Whether it's an investment in a laundromat or an income producing rental building, the prospective owner needs to know how long it will take till the income produced will pay him back the total amount of his investment. If choosing between two or more investments, the smart investor wants to know which will be most efficient and have the faster payback, all else being equal.
Investing in the stock of a company should be looked at in the same way. After all, the buyer of a share of stock is an owner and is entitled to his share of income from the business, paid out as a dividend.
Incorporating Return on Investment, or ROI, should become an important part of the investor's bag of tricks as he performs his due diligence on prospective companies to add to a dividend portfolio.
Income investors understand that the volatility of the stock market makes it next to impossible to predict any semblance of return on investment based on stock price. Those prices are influenced by too many variables that are not within the control of the investor and can cause prices to rise and fall with no rhyme or reason.
Most investors would agree that when a stock rises or falls 10% on any given day, with no particular catalyst, that the intrinsic, or liquidation value of the company could not have changed that much in one trading day.
However, if we choose investments in companies with long and reliable records of paying an increasing dividend stream, we have entered into a more predictable space and one where future dividend streams can be inferred from past performance.
This new Dividend ROI tracker performs that function for us automatically with just a few inputs required.
Because it incorporates historical compound annual growth rates, it becomes a living, breathing tool that reliably predicts future income streams and dividend accumulations, as long as the company at issue continues its future payouts along the lines of past payouts.
Features of the Dividend ROI Real Time Tracker
After entering a company ticker and number of shares held, or prospective amount of shares to be bought, and the CAGR (compound annual growth rate) this tracker will automatically show you:
1. The current stock price all day long in real time.
2. The current dividend, and change automatically when it increases or decreases.
3. The current dividend yield and will change in real time with the change in stock price or dividend amount.
4. Your current total dollar amount of your investment.
5. Your current annual income on your total shares.
6. This year's annual income.
7. The projected annual, accumulated dividend income over the next 30 years.
8. No math skills are required. All of the embedded algorithms do all the work for you.
When you scroll to the right, the accumulated dividend totals are clearly displayed. Now, it is simply a matter of scrolling until you see at what point your total accumulated dividends match your initial investment in the company. Once this point has been reached, you've attained a 100% return on your investment on dividends alone.
With this goal accomplished, why stop there?
As you scroll all the way to the right, you can see yearly what your dividends will accumulate to, as far as 30 years out.
The tracker comes with an easy to follow guide, and several clickable websites that can be used to obtain desired CAGRs for use in this tracker.
It should be noted that future changes to a company's dividend, either higher or lower than historical CAGRs indicate, will have an impact on the projections made by the tracker. When you insert a changed, future CAGR, it will be automatically reflected in all future dividend accumulation projections in the tracker.
This tool can also be used to compare two different companies with different dividend amounts, yields and CAGR. This can help choose the more efficient use of an investor's capital to attain a quicker ROI.
In the example shown, AT&T is paying a higher current yield than Verizon, their rival in the telecommunications space. To do a comparison of these two companies, we've used the tracker to automatically determine the correct number of shares to buy in VZ in order to compare two equal dollar investment amounts.
It is clear that because T pays a higher yield, the income derived on this position is higher for several years as compared to the income received from our VZ investment.
Take a look at the picture of CAGR for each stock over the past five years. Notice that VZ has been growing its dividend by 3.07% annually, while T has been growing it at the rate of just 2.22%.
If you scroll to the right, you notice that by the 12th year, the accumulated dividends obtained from our investment in VZ has not only caught up to, but has surpassed those dividends earned on T to that point.
VZ, if it keeps up its record of growing the dividend at its recent rate, will pay the investor back 100% of his investment by year 14. T, by comparison, takes a bit longer, to year 15 to accomplish the same goal.
By year 30, it becomes readily apparent that the investor in VZ has accumulated $3,672.91 more dividends, $25,662 in total , than the investor in T who accumulated just $21,989 over the same time frame.
This ROI tool can help us to choose more of our investments wisely, with an eye towards higher total payouts and faster returns on our investments.
Who doesn't enjoy playing on the house's money? This tool reveals when that day will arrive.
The simple interface of this digital tool makes it easy to arrive at the answer: How long until the dividends from my company pay my original investment back?
This new digital tool is a web enabled app. No additional software is required. It runs easily on any computer platform, operating system, tablet or phone.
There are no ongoing subscription fees to use this app.
It should be noted that past performance of a company's dividend payout record cannot necessarily be counted on for future performance, nor can it be guaranteed in any way.
However, we can increase our chances of success by focusing our efforts on choosing companies with long, reliable records of growing their payouts to shareholders.
If dividends increase higher and a faster rate than history suggests, the investor will reach 100% ROI from dividends that much faster. Should dividend increases in the future progress at a lower and slower rate, 100% return on investment will take that much longer to achieve.
Any dividend decrease or elimination will necessarily slow down this progress considerably.
Additional Disclaimer: This article is intended to provide information to interested parties. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before purchasing any stocks mentioned or recommended.