Cost of $1 of Dividends

[cannew]

One of the items I look at periodically is what it cost me for one dollar of dividends I receive. I divide my total investment (my cost) by the total annual dividends.

Currently my cost is $17.02 for a $1 of dividends.

[ChadR]

Interesting way to look at your cost of dividends. Never looked at it this way.

[Kerim]

That is interesting. My number is 18.32.

If I get the math, this is another way of looking at yield on cost. With classic yield on cost, you divide the annual dividends into the original cost. Your approach looks at it the other way around.

You could also use that point of view when evaluating new investments, instead of using initial / current yield. $1 in dividends from KO right now costs about $35, while $1 in dividends from T only costs about $19.50.

[cannew]

I look at the number every Qtr to see how much it's gone down (or up), once I've recorded the dividend re-investments and any additional purchases (and sales though they are rare). My $1 cost has gone down steadly now that nearly all my companies have increased their dividend.

[Kerim]

That makes sense. Just like yield on cost naturally moves upward over time as dividends are increased (though this can be somewhat diluted by new purchases), your cost per dollar of dividends will naturally move downwards over time as dividends are increased (though this can be somewhat diluted by new purchases).

[cannew]

As I don't buy often, and rarely sell, one has to look at something to remind oneself that the system is working. Everyone say's DG is like watching paint dry, but once it drys what do you do if there is no activity other than the Qtr dividend pymts and hopefully increases.