Smart Reasons to Save, Use and Invest Money

Dividend Stocks, Lunch Experiment Update #4

It’s time for my Dividend Stocks Update on my Lunch Experiment!

For the first 2 stocks in my experiment, I borrowed money from my checking account so I could seed the money for the initial investment.  But since I fully paid myself back on the first two stocks (ANH and EVEP), I decided to take borrow more money from my checking account so I could purchase some shares of another dividend stock

This time I chose a dividend stock called Chimera (another REIT).  It’s dividend yield is a ridiculously high 17%.

Initially, I was only going to borrow $1,000, but I decided to bumped the amount up to $2,000. 

Since I’m getting money from my other dividend yielding stocks for lunch, I decided to bump up my weekly savings rate to $60.  So I should be able to pay myself back in less than 33 weeks (sometime in mid-May 2011).

Here is my Dividend Stocks for my Lunch Experiment Spreadsheet:

Stock NameAnworthEV EnergyChimera
Stock TicketANHEVEPCIM
# of Shares26045600
Orig. Price$7.84$23.25$4.01
Curr. Price$7.16$34.26$4.14
Orig Cost$2,038.14$1,046.25$2,404.80
Curr Value$1,861.60$1,541.70$2,484.00
Annual Yield13.87%8.85%17.27%
Dividend / year$258.20$136.44$428.99
  Total Dividends$823.63
  52 weeks52
  Dividend / week$15.84

 

Overall, I’m pretty please with the outcome of this experiment, but now let me explain some things about my experiment:

  • The money used in this experiment is basically “Free Money” because it would have been spent on lunch going out with the guys!
  • Since it’s “Free Money“, I can afford to lose it all of it if it came down to that!  Yes, I would cry a bit at first, but its money that would have been wasted on eating out anyway.
  • Since I can afford to lose this “Free Money“, I can take risks that I normally wouldn’t take.  I usually don’t recommend anyone buy a stock with a 17% annual return.  This dividend yield will come back to earth eventually!
  • This is purely for fun, that’s why I call it an experiment 🙂

And now for some interesting facts about my experiment results:

  • EVEP is up almost 50% from where I bought it at!  To bad I only bought $1,000 dollars worth.
  • ANH is down 8% from where I bought it at!  To bad I bought $2,000 dollars worth of this stock (booo)
  • CIM recently raised it’s dividend payout for the quarter by 1 cent.
  • The guys try to convince me to go out to eat with them more, but I’m content on doing the library thing.  Occasionally, I’ll go with them for sushi!  Sushi is my kryptonite when it comes to eating out…
  • I get a huge kick when I see the dividends hit my online brokerage account. 
  • Yes, I am nervous about the tax cuts expiring though!  Perhaps I’ll have to move my lunch experiment to my roth ira account…
  • Doing a real documented experiment like this has been a great experience!

I’m having a great time with this experiment, so far I figure that if the dividend yield rate stays the same (which is highly unlikely), I would be able to go out to lunch twice a week with the guys! 

Ironically, I no longer have a desire to go out to eat at lunch and spend so much money.  In fact, now I mainly go to the library at lunch and read other personal finance blogs and work on this blog!

What do you think of my lunch experiment and my progress?  Do you think I’m crazy for going with such a high stock dividend yield?

-MR

 

Related:

Check out the next update in my Lunch Experiment, #5.
Or go back to the previous update via my Lunch Experiment #3.

18 Responses to Dividend Stocks, Lunch Experiment Update #4

  1. 17% is an impressive return. Hopefully, the tax cuts expiring wont hurt dividend investors too much. (I’m trying to be optimistic). If things go as Timmy G suggested, it may go up to 20% from 15% (which is not great but not a deal breaker either). The people who really seem to lose out are those who have low income and receive qualified dividends: their taxes may increase from 0% to 15%.

    • Yeah, on the low end, that would really hurt! Hopefully their deduction and credit would enable them to avoid paying taxes though!

      My Lunch experiment has morphed into a shoot for the dividend sky fund, but it’s still fun.

      I almost like playing with the houses money on this since it’s money I would have spent normally. I feel like I’m in Vegas 🙂

  2. Hey, you are having fun with it and learning along the way, so I think it is great!

    What brokerage do you use for you stock purchases? Since your amounts are fairly low, I imagine you are sensitive to transaction costs.

    • I like Charles Schwab, Etrade, and Scottrade.

      I’ve had some since I was a kid…

      The transaction cost run between $5 to $10, so it’s very affordible with the online brokers.

    • It’s a lot of fun!

      I like Charles Schwab, Etrade and Scottrade.

      At the online brokers, the transactions costs per buy is only $5 to $10 dollars per order. Not to bad, but I still wait until I have at least a $1,000 or I borrow that much from my checking account and pay myself back.

  3. I’ve been moving dividend stocks to IRA accounts. Taxes are going up no matter what, or who’s in charge.

    I personally like dividend aristocrats and not just any company that offers a dividend.

    • Yeah, those are good, nice stead upward dividend growth!

      I a little on the wilder side, I have a few REITS O: Reality One (this stock is pretty darn close to a Dividend Aristocrat)

      But my lunch experiment is purely for an adrenaline rush. I expect most of these companies to drop their dividend yield substancially.

  4. Nifty. Since it’s entertainment money, you go do whatever you want with it (so long as it’s legal).

    My father really enjoys playing with the stock market. Me, I prefer just letting things sit. I still like my index fund dividends. It’s like a little present every quarter. 🙂

    • I like Charles Schwab, Etrade and Scottrade. I guess TD Ameritrade is okay too…

      At the online brokers, the transactions costs per order is only $5 to $10 dollars per order.

      I only buy stocks for fun, the bulk of my money is in a balance portfolio in retirement accounts.

    • Even the one that’s down 8% is still yielding a 15% dividend, so I’m still up if you add back in the dividend 🙂

      This experiment required some lifestyle sacrifices, but from a financial perspective, it’s free!!!

      I’m going to morph it into something again next year!

  5. Hey just came across your site: 10/18/2011 and I think the experiments are Great! I’m with you on saving money by not eating out. Love what your doing, keep it up. I have just started looking into investing in the stock market, all new to me. So will be visiting your blog a lot. Lots of good easy to follow info. Thanks, Mary