Dividend-Reinvestment Plans (DRIPs) and My Portfolio

DRIPS I Have Bought For My Portfolio

This is a continuation of my article on introduction to DRIPs. Below is my portifolio of stocks I have bought through Moneypaper within a roughly 12 month period.. As I have said before, in most cases after you have bought one share of stock you never pay a commission again, but instead, 100% of what you additionally contribute to a stock goes into buying that stock without any other fees.


If a share of a stock you have bought is now selling at $80.00 but you don't have an extra $80.00 lying around you can in most cases, depending on the stock, make a contribution of anywhere from $10.00 to $50.00 and get a fraction of a share in much the same way you buy mutual fund shares.


In my portfolio below I have tried to spread my money over different business sectors, a couple of utilities, a bank stock, chemical company, a drug company, a manufacturing company, media company and a couple of companies that make “staple” products, such as General Mills.


How much did it cost me to buy the shares of these ten stocks through the Moneypaper? Well under $500.00 and you can buy as many stocks as you want at a time. I bought one about every month until I had ten stocks so the cost to me to get started was in most cases, less than $50.00 a month for about ten months.


Stock 
Sector 
Recent Price (1/8/2011)
Dividend Yield
Northwest Natural Gas Company
Utility
$46.73
3.70%
Piedmont Natural Gas Company
Utility
$28.00
4.00%
General Mills
Consumer Goods
$35.62
3.10%
Pfizer
Drugs
$18.34
4.40%
R.R. Donnelley & Sons Company
Business Services
$17.63
5.90%
Graco Inc. 
 Industrial Goods
$39.32
2.10% 
 Dow Chemical Company
Chemicals 
$34.93
1.70% 
RPM International Inc
  Industrial Goods
$22.38
3.90% 
*Anheuser-Busch
Consumer Goods
$56.60
0.70%
*Regions Financial Corp
Bank
$7.02
0.60%

All in all I haven't made much money over the years in the appreciation of the stock prices except for Anheuser-Busch and Dow Chemicals but (I bought Dow at around six dollars)the dividends have put me in the black and the great thing is once you buy a share of stock the dividends keep on rolling in and are reinvested to buy more stock which in turn produces higher returns.

I chose stocks that have paid or increased their dividends for years, in some cases decades. If I remember right, a couple of these stocks have increased/paid dividends for over 50 years!

The stock I'm most disappointed in is Regions Financial. What's tough is it's not a stock I bought. I originally bought a great little bank called AMSouth. Regions Financial took them over. I remember when it happened. No one at the time thought it was a great idea. Turned out they were right.

Anheuser-Busch is a stock I made money on but I don't own the company now. Anheuser was bought out by another company and they paid all the share holders a sum of money. Basically paid them off.

I own twice as many shares of General Mills then I bought, thanks to a 2-1 split.

Buying stocks through a dividend reinvestment plan does not require much money to make the initial purchase or to buy additional shares. This is not a short-term way to make money. This is for people who want to invest for the long-term. Stocks have had their up and downs but over the long-term they have performed on the average better than most other investments.

It's been said that the only people who owned stocks and lost money during the Great Depression was those that sold their stocks. Those that held on to their stocks were rewarded a few years down the road.

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Comments 2 comments

Glenn Stok profile image

Glenn Stok 4 years ago from Long Island, NY

This is a great review of DRIPS. I never actually invested this way because I tend to buy stocks that don't pay dividends. Except for Apple. But they just started paying dividends recently. I learned a few things from you. I didn't know that you can invest small amounts and a DRIP. That makes it a very useful method of investing for someone who wants to diversify among a lot of stocks with a limited amount of cash. You explained that very well. And your table also serves as a very good example that can help people decide what stocks they can do this with.

I saw your link to my hub on Short-selling stock options. And I want to thank you for recommending it. I truly appreciate it.


redwhiskeypete profile image

redwhiskeypete 4 years ago from Indiana Author

Thanks, for the comment Glenn

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