Holding A High Dividend Stock For A Couple Of Years

With BP on my mind after writing last night’s article, I was once again a bit surprised to study the full effects that dividend payments can have—not just in terms of total returns—but also in providing a cushion against the next fall in the price of stock. The list of companies with worse PR issues than BP is indeed short, and people who remark that the price has little changed since 2010 are, of course, right.

But here is what I see: $1.68 in 2011 dividends, $1.98 in 2012 dividends, $2.19 in 2013 dividends, $2.34 in 2014 dividends, and (projected) $2.40 dividends in 2015. The price at both the start of 2011 and the middle of March 2015 may be $40 per share, but the underlying reality is this: You will have collected $10.59 in dividends by the end of this year. To sustain a paper loss, assuming you bought … Read the rest of this article!