Investing in Dividend Paying Stocks
I was recently interviewed for a press release through a financial
question and answer format. One of the questions asked of me in
the interview was:
Where do you think the stock market is headed over the next five
Charles M. OMelia: No one knows! There is an old Chinese
proverb that goes something like this: He, who could foresee
events 3 days in advance, would be rich for thousands of years.
On a long-term basis I have only witnessed expansion and progress.
I believe that to be the nature of our American economy and our
American way of life. And as our economy goes, so goes the stock
market and I see no reason to change that belief.
Who would have thought the expansion in China would generate 5
billion dollars of business for GE? The US companies listed on
the New York stock exchange have the ability to profit throughout
the global expansion of business around the world. And, an investor
can profit without the necessity of having to own an overseas
fund or companies to profit.
Up until that question, the thought of what the market was going
to do tomorrow (or for that matter, 5 years from now) have never
concerned me. I never gave it a thought (Well, maybe a little!).
There just isnt enough concern on my part whether we are
heading for a bear market or a bull market, or if the markets
are heading sideways.
When you own a portfolio filled with companies that have a history
of raising their dividend every year, and a systematic approach
of adding more shares to the portfolio through the dividend reinvestments
every quarter, plus having a simple savings plan with an opportunistic
buying approach of adding even more shares to the portfolio every
quarter, it really doesnt matter. I am always buying more
Sometimes I pay too much for one of my companies; sometimes I
receive a great bargain. But no matter which, bargain or expensive,
my income from those companies always continues to grow and grow
and grow and grow and grow.
Sometimes, the dividend yield of one stock may be 5.15%, and the
following year or two (even with two dividend increases during
those two years) the dividend yield would drop to less than 3%.
This, for example, may mean the stock price would have risen from
the 30 dollar range to the 60 dollar range. I have found that
when that 5.15% dividend yield drops to around 1%, the companys
stock in question becomes so high that the company usually has
a stock split, as well as a dividend increase.
Right now, the DOW seems to be having trouble breaking that 11,000
barrier. And, right now, I cant help thinking back, way,
For those of you who dont remember the late 1960s,
early 70s, the DOW barrier was 1,000.
Oh, what a tough time that DOW 1,000 barrier was! I remember thinking
its going to break it this time. Back in 1966 was
the first attempt (rose to 985) and it kept on trying to break
1,000 for the next 6 years. When it finally broke 1,000 (it reached
1,050 or so in 1972), it immediately fell back. It took another
10 years before the DOW broke the 1,100 barrier. Six years for
the DOW at 985 to break 1,000. Another 10 years to break 1,100.
A total of 16 years to add a mere 115 points on the DOW.
So, is the 11,000 barrier in the DOW today similar to the 1100
barrier of times-gone-by? Will 11,000 on the DOW become a 16 year
barrier? Could be! Then again, maybe not! I dont know! He,
who could foresee events etc.
In the meantime, I will continue watching my dividend income continue
to grow and grow and grow and grow and grow!
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About The Author
Charles M. OMelia is an individual investor with almost
40 years of experience and passion for the stock market. The author
of the book The Stockopoly Plan Investing for Retirement;
published by American-Book Publishing. The book can be purchased