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Johnson & Johnson Message Board

  • wooglin_kai wooglin_kai Jun 6, 2014 1:11 PM Flag

    The Power of Reinvesting Dividends

    With this Tuesday's payout, I will have been reinvesting my ROTH JNJ position for ten years (I've owned JNJ a bit longer).
    6/8/04 div: .285/Q
    6/10/14 div: .70/Q
    An increase of 145.6%
    For those who have reinvested their dividends for the past 40 payouts, the amount they received has increased by 227.5% v 145.6% for those who took their div payments in cash.

    In dollars, for 100 shares, the June 2004 payout would be 28.50
    Not reinvesting divs, the June 2014 payout would be 70.00
    Reinvesting divs the past ten years, the June 2014 payout would be 93.34, or a third more.

    What I like even better is that over the past ten years (5/31/04 - 5/30/14), JNJ has outperformed the S&P 500.
    Total Return:
    JNJ: 143.39%
    S&P: 111.23%


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    • Your NEVER too young to start Roth IRA's or Drips to save for those golden years. I was told that baby boomers that are not retired have less then 50K in retirement savings. Good going with starting early, you will reach that goal sooner then later.

      Sentiment: Buy

    • JNJ may actually be LOW….COP divi has increased X4.2 ($0.164 to $0.69 per Q) over that same period and that does NOT INCLUDE the dividend paid by spin off P66! Re dividend reinvestment….the best DRIP vehicle is the corporate 401K plan so you don't have to pay fees and worry about your cost basis.

      • 1 Reply to copdriper
      • I am sure there are many examples of better results. (sorry conservative influence LOL).
        The purpose of my post was to let real numbers demonstrate the long term benefit of reinvesting divs in general.
        I hear you about cost basis. Perhaps your 401K plan has low fees, but from what I have read, a lot of 401Ks are fee heavy (not including the fees related to the underlying mutual funds themselves).

    • I'd like to note that you aren't likely able to have such a similar experience with many other stocks. JNJ is one of a kind for dividends.

      • 2 Replies to conservative_influence
      • chicken has already chimed in, but since your post was directed to me, I'm doing so as well.
        I've owned CL for over 10 years and have reinvested the divs.
        I will use the same time frame as above (ten years from 5/31/04).
        During the last ten years, CL did MUCH BETTER than JNJ:
        Total Return: 200.81%.
        My CL div payment has increased 3.78 times (or if you prefer percentages, 278%), since ten years ago.
        I have SEVERAL other example, but hopefully from what chicken and I have posted, you now realize that JNJ IS NOT "one of a kind for dividends".

      • I'd like to note that you're very mistaken. If you search for "dividend champions" you'll find a list of over 100 stocks that have increased dividends annually for at least 25 years. JNJ is one of them, but it doesn't stand out. MMM, XOM, MCD, there are literally hundreds of stocks that would have performed just as well or better. That's in terms of every metric, from yield to dividend growth rate. I'm happy to have JNJ in my portfolio, but it's certainly not one of a kind. It's middle of the pack in my little collection.

    • cool thank you.

    • Congratulations on your choice to reinvest dividends. It's one of the simplest ways I know to build wealth. Start with companies with a long history of increasing dividends, and just stay out of their way. Have you done the same thing with any other companies?

      • 1 Reply to chickenguy_nc
      • chicken,
        I was never a fan of DRIPs, reinvesting divs via the transfer agent (operationally a bit of a pain). About ten years ago, I realized I could reinvest divs via my brokerage AC (and with no fees, unlike the one DRIP I had, but transferred to my brokerage). About 70% of my individual equities pay a div and I have been reinvesting divs with most of those stocks. IMO, the key is for investors to not get too swayed by a company's initial yield, but whether the company is consistently increasing the div!
        On a side note, I own a few mutual funds and ETFs and I reinvest all distributions.

        While some may finds splits to be "fun", I find it's rewarding to see my annual div income increase year over year.


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