I am a novice investor with a limited understanding of the stock market. I bought FF 2 years ago around 21. Since I have recieved about 9 dollars in dividends. At this rate in three more years, if the div stays in the same neighborhood I will have back my original 21 dollar investment. At this point I will have no risk of losing money on my ff purchase, assuming I do not reinvest. I will be able to sit back and watch "free" dividends role in. Is this an oversimplification? Where does this plan fall apart? It seems to me that I have stumbled into a way to make some very easy money, but I know that nothing is ever free.
Take your dividends in stock every year. You would now have like $31 worth of stock. In 3 more years you would have like $51 worth of stock and be getting a $10 return that year. This is based on a 20% per year increase in net asset value, which is their average for the 20 years FF has been in business. 72 divided by 20 equals 3.6. In 7.2 years your $21 should be worth 63, and in 10.8 years it should be worth $126. The beauty of compound interest.