Many financial bloggers talk about compound interest.
Many dividend investors talk about compound interest.
Here's why -
I will be starting the 2017 year with ~$2,200 in my Robinhood Portfolio. Throughout the year, I will receive dividends, let's assume ~3.5%.
Below is a chart of my projected portfolio amount if I don't add any more money out of my pocket, and I buy stocks only with the dividends I receive.
Year | Starting Portfolio Amount | Div Yield % | Dividends |
2017 | $2,200 | 3.50% | $77 |
2018 | $2,277 | 3.50% | $80 |
2019 | $2,357 | 3.50% | $82 |
2020 | $2,439 | 3.50% | $85 |
2021 | $2,525 | 3.50% | $88 |
2022 | $2,613 | 3.50% | $91 |
Now, if I add $26/week every week (like I've been doing), here's an updated table.
Year | Starting Portfolio Amount | Div Yield % | Dividends |
2017 | $2,200 | 3.50% | $77 |
2018 | $3,629 | 3.50% | $127 |
2019 | $5,108 | 3.50% | $179 |
2020 | $6,639 | 3.50% | $232 |
2021 | $8,223 | 3.50% | $288 |
2022 | $9,863 | 3.50% | $345 |
Obviously these tables make a lot of assumptions. I assume it will be a constant 3.5% dividend yield. I assume my portfolio value won't go up or down with the market. BUT, I think the tables make their point. If I keep adding money from my own pocket to buy dividend stocks, along with dividend money, the compound interest will benefit my portfolio!
Signed,
Mitch
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Thanks for your thoughts!