Tackle Today: The Silver Lining of Lower Prices
October 13, 2021
≈ Reinvested Dividends. ≈
Traders,
I’ve been grappling with the pain of the ongoing breakdown in Verizon’s share price. The damage hasn’t been isolated to VZ. AT&T, T-Mobile, and even Comcast have been getting thrashed over the past week. But while the price plunge steals gains and may even push positions into negative territory, I’m reminded of one of the most significant silver linings to the haircut.
Reinvested dividends buy more shares at lower prices.
If you’re a long-term investor in companies like Verizon that are both fundamentally sound and pay rising dividends, then you know the current pain is likely to be temporary. And, while prices are depressed, each quarterly dividend you receive will buy that many more shares. For example, let’s say you own 300 shares and receive quarterly payments of $192. When Verizon was trading for $60, each dividend would buy another 3.2 shares. Now, what if VZ pushes down to $50? At that point, each cash payment would buy 3.84 shares.
If like me, you believe in the stickiness of Verizon dividends (and history backs this up), then corrections and bear markets should bring pleasure. They accelerate how quickly you accumulate more shares. Consider reinvested dividends in times of turmoil the seeds your planting for future profits.
#TeamTackle
Chart of the Day
Verizon Dividend History
Verizon has a long history of raising dividends. This has helped shareholders up their income every year to keep pace with inflation.
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