Comments on Dividend Growth Investor: Dividend Payback from six quality dividend stocks

My brokerage is BoA Investments, which is now &quo...

2010-05-24T11:55:06.695-07:00

My brokerage is BoA Investments, which is now "BoA Wealth Management" which is "powered by Merrill Lynch.

They have cheap commissions. $5, $7, or $10 depending on your banking relationship status.

$5 is what I pay, but I found out they do offer 30 free trades a month. The caveat is that you must have account balances of $25,000 in FDIC insured deposits (Checking, Savings, CDs, Money Market Savings) in order to get the free trades.

30 is not so limiting. I am just not so sure I want to tie of $25K of cash in such low interest bearing accounts. I never trade to that level of frequency, so for me I would be saving only $5-50 a month in trading fees, not sure the trade off is worth it for me.

I typically accumulate the cash and then allocate ...

2010-05-20T15:33:05.197-07:00

I typically accumulate the cash and then allocate it to investments. I only reinvest a few stocks automatically through sharebuilder. I do use Zecco, since I hate paying commissions. And 10 free trades/month is enough for a buy and hold investors.

Of course I thought of that AFTER I posted my comm...

2010-05-20T15:00:48.452-07:00

Of course I thought of that AFTER I posted my comment. :)

I do wonder... what is the preferred method?

Reinvest divs automatically? My brokerage at BoA Investments will set up commission free reinvestments of divs, even if a company does not have a defined DRIP.

However... I am on the fence about this. I currently just take all the cash, and then when I have accumulated a pile, I will go buy a new stock, cef, or etf, or will buy more shares of something I already own.

The downside for me, is I have to pay a $5 trade commission on my own trades. Whereas is I let the brokerage set up automatic reinvest, there is no commission.

For me, I like the control, and the choice. Though I am not sure its really in my favor.

Your thoughts?

-chris aka Wangooroo

PS - Really like your blog!

Wangooroo, I use 19 years because I do not assume...

2010-05-20T08:27:29.739-07:00

Wangooroo,

I use 19 years because I do not assume dividend reinvestment. If we reinvest dividends at 5.40% for 13 years, then we will be able to get our capital back much faster. If the company raises dividends, that woudl speed up the process as well.

Why wouldn't you use the "rule of 72"...

2010-05-19T21:22:16.412-07:00

Why wouldn't you use the "rule of 72" to calc your time to get your money back with dividends?

If your div yield is 5.40%

You should get your money back in 13.33 years not the 19 years you mention.