Do Dividends Matter
Section A - illumin8
Do Dividends matter ?
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in”- John D. Rockefeller
This quote from John Rockefeller, one of the wealthiest people in modern history, beautifully articulates an investor’s love for receiving dividends. Little surprise then that dividend investing remains a very popular investment strategy.
On the other end, you have investing luminaries like Philip Fisher who in his seminal book “Uncommon Stocks and Uncommon Profits” had devoted an entire chapter on how dividends play an insignificant part in an investor’s quest for maximizing returns and finding outstanding companies.
The views of Rockefeller and Philip Fisher represent two diverse views on dividends in the investing world. Dividends and Investors have a strange relationship. Some investors actively seek dividend stocks, some completely ignore them and many are in between.
The short answer to the question “Do Dividends Matter?” : Yes.
Check out this infographic about USD 10000 of Coca-Cola stock invested in 1962 under two scenarios:
a) Dividends reinvested in the same Coca-Cola stock
b) Dividends not reinvested
The difference: 2 Million USD !!!
For a longer answer, please read the remaining post.