Category Archives: Experiment

Dividend Stocks, Free Lunch Experiment #9

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Lunch Experiment Update:

Dividend Experiment Cafe

Dividend Experiment Update

I have finally paid off the loan to myself that I borrowed to buy the latest stock that I bought (CIM).  This last repayment time to myself went really fast.  In fact, it went so fast that I’m done borrowing money from my checking account to fund my stock purchases.  From now on, I”m only going to use the money that I save, and perhaps money from the dividend checks received from the fund itself.

And Now on to the Analysis of My “Lunch Experiment” Investments:

First let me say that I”m excited to say that EVEP has doubled for me (woo hoo)!  Unfortunately, it’s also the position I have the lowest initially investment in (boo).  Ironically, stock appreciation isn’t what I’m really shooting for…  not that I’m complaining!  But the real game in this experiment is reoccurring dividend payouts.

  • Overall, the “Total Return” of my investments since investing in 2009 is up 19.31%.  Note, this number is not per year, but simply the percentage gain of what was originally invested vs the current value.  In case you are wondering, yes, I do follow the KISS principle.
  • The “Cumulative Value” of my investments equal $6,548.90!  This is money that would have went to the restaurant owner and to the waiter in tips.  But now it’s sitting in my brokerage account earning me a dividend.
  • With a dividend of $14.88 a week, I can easily afford to go out twice a week with the guys at work.  Especially if I buy cheaper meals such as soup.  Believe it or not, soup at a decent restaurant actually tastes great!

Experiment Observations To Date:

This experiment will span 2 years.  I’ve done much better than I anticipated!  While my dividend stream is extremely high risk, the money involved is practically free money since I would have been spent on dinning out at lunch anyway!  It’s also not diversified very well either!  But this is an experiment, and the normal nature of such experiments come with certain levels of risk.

So with this particular experiment, I’m shifting gears into overdrive for a smoother ride until the end of the two years (2 years is the length that I initially defined as the duration of this experiment).

If you have read this experiment from the start, thanks for hanging with me, it’s been a great ride to date!

Do you have any questions about my experiment and more importantly, do you see the value in doing something similar?

-MR

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Dividend Stocks, Free Lunch Experiment #8

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Dividend Stocks, Lunch Experiment Update:

Dividend Experiment

Dividend Experiment Update

This month, long with the Stock market overall (the DOW is above 12,000 again… hooray), I gained in both EVEP and CIM!  The stock ANH didn’t move staying the same price.  If I could, I would like to get rid of ANH and buy something more conservative. 

So far, I’ve been impressed with the performance of my experiment portfolio, I gained another 2% from last month.  I’ve heavily invested in REITs, and I need to switch into another type of dividend stocks some day.  Most likely, I will try to dump ANH…  soon! 

Background:

The Free Lunch Experiment, which invests in dividend stocks so that I can use the yield to pay for my work day lunches, is my first true experiment here at MoneyReasons.com and was started with the article called: “Paying An Adult Allowance, A Lunch Experiment”.  As explained in the post link above, the money used in this experiment is sort of like free money because it would have been spent on eating lunches out at work anyway.  This means that if I were to lose the money in this experiment tomorrow, it wouldn’t bother me because it really didn’t cost me anything to fund.  Of course the probability of losing all my money in the stocks in the experiment is very slim. 

Having practically free money in this experiment, I’m able to take higher risks that I normal would consider. 

Now on to this month’s results!

           
  Stock Name Anworth EV Energy Chimera  
  Stock Ticket ANH EVEP CIM  
  # of Shares 260 45 600  
  Orig. Price $7.84 $23.25 $4.01  
  Curr. Price $6.95 $42.98 $4.26  
  Orig Cost $2,038.14 $1,046.25 $2,404.80  
  Curr Value $1,807.00 $1,934.10 $2,556.00  
  Annual Yield 13.24% 7.05% 16.90%  
  Actual Dividend $59.80 $34.07 $108.00  
      Total Dividends $807.48  
      52 weeks 52  
      Dividend / week $15.53  
           
      Total Gain in    
      Stock Apprec. $807.91  
           
      % Change 14.72%  
           
           
      Amt Loaned to myself: $1,726  
      Amt paid back to date: $1,459  
      Amt Still Owned: $267  
           

  

Priming the Pump:

As I stated in my previous posts, the money involved in this experiment is technically free money, to expedite the stock purchases I’ve borrowed money from myself a few times just to speed up the investing process, this action is called “priming the pump “.  Of course I’m paying myself back.  Currently, I still owe myself $267. 

Modifications to the Experiment

I decided to wait to make changed to the experiment, I’m still rolling around ideas in my head, who knows… maybe I’ll end up putting the money in some dividend yielding mutual funds instead and just leave it g0!  I wonder if I make enough in dividends if I’ll have to pay an estimated quarterly tax payment 2011?

-MR

Dividend Stocks, Free Lunch Experiment #7

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Dividend Stocks, Lunch Experiment Update:

Dividend Experiment

Dividend Experiment Update #7

This month, capital appreciation in the value of the stocks in the experiment has overall risen because of EV Energy (EVEP).  Ironically, EVEP is also the stock that I bought the least amount of.  Surprisingly, the market value of EV Energy has just surpassed the market value of ANH.  This is surprising because ANH cost me double the amount as EVEP did.  In fact, the share price of EVEP is starting to worry me a bit; it’s starting to look frothy so I’ll probably review the financial stats to make sure it’s still solid and not overbought.

The other two stocks in the experiment have remained close to the market values that they were last month.

Background:

The Free Lunch Experiment, which invests in dividend stocks so that I can use the yield to pay for my weekly lunches, is my first true experiment here at MoneyReasons.com and was started with the article called: “Paying An Adult Allowance, A Lunch Experiment”.  As explained in the article link in the preceding sentence, the money used in this experiment is free money because I would have spent it on eating lunch out with friends at work anyway (and yes my friends still go out everyday).  This means that if I were to lose all the money in this experiment tomorrow (very unlikely), I would really be out nothing!

By having free money fund this experiment, I’m able to take additional risks that I normal wouldn’t consider.

In some perverse way, one could consider the experiment money a form of emergency money, but I prefer not to make that claim…

Stock Name Anworth EV Energy Chimera
Stock Ticket ANH EVEP CIM
# of Shares 260 45 600
Orig. Price $7.84 $23.25 $4.01
Curr. Price $6.95 $42.33 $4.07
Orig Cost $2,038.14 $1,046.25 $2,404.80
Curr Value $1,807.00 $1,904.85 $2,442.00
Annual Yield 13.24% 7.15% 17.69%
Actual Dividend $59.80 $34.07 $108.00
Total Dividends $807.48
52 weeks 52
Dividend / week $15.53
Total Gain in
Stock Apprec. $664.66
% Change 12.11%
Amt Loaned to myself: $1,726
Amt paid back to date: $1,299
Amt Still Owned: $427

Priming the Pump:

While the money involved in this experiment is technically free money, to expedite the stock purchase funding I’ve borrowed money from my checking account a few times just to speed up the process (thus priming the pump so to speak).  Of course I paid myself back too though.  Currently, I still owe myself $427.

Evolution of the Experiment:

Now that the experiment is established and generating a decent dividend stream, after I pay off my loan to myself in mid-March 2011, I may cut back on the amount that I borrow from my checking account or not borrow any more from myself at all.  This would mean that I would just save the money by not eating out first, then purchase additional stock after I save up enough to make a decent buy.  I many use some of my dividend money to help purchase future shares too.

Hopefully, by the next monthly update I’ll be able to provide more details about the specific of the future changes to this experiment.

-MR

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Dividend Stocks, Free Lunch Experiment #6

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Well, it’s time for another update!  The dividend payout rates have not changed and the overall appreciation of the stocks has raised!

The Free Lunch Experiment, which invests in dividend stocks, is my first true experiment here at MoneyReasons.com and was started with the article called: “Paying An Adult Allowance, A Lunch Experiment”.

In a nutshell, the experiment is that I want focused investments in certain dividend stocks to pay for my lunch when I go out to eat at work.

The real advantage is that the money I’m investing in, is money that I would have spent for lunch anyway.  In my opinion, this make this money free because it would have been spent!  So if I were to lose all of the money tomorrow, I would be sad, but it’s money that I wouldn’t have had anyway had I not started the experiment.  In other words, the first dollar saved was a 100% gain on what I had previously, which was a spent dollar.

So much like the reference in the movie “Blade“, the Lunch Experiment has all of the advantages, and not of the disadvantages of being an stock dividend investment.

Stock Name Anworth EV Energy Chimera
Stock Ticket ANH EVEP CIM
# of Shares 260 45 600
Orig. Price $7.84 $23.25 $4.01
Curr. Price $7.14 $38.25 $4.13
Orig Cost $2,038.14 $1,046.25 $2,404.80
Curr Value $1,856.40 $1,721.25 $2,478.00
Annual Yield 12.89% 7.92% 17.43%
Actual Dividend $59.80 $34.07 $108.00
Total Dividends $807.48
52 weeks 52
Dividend / week $15.53
Total Gain in
Stock Apprec. $566.46
% Change 10.32%
Amt Loaned to myself: $1,726
Amt paid back to date: $1,139
Amt Still Owned: $587.00

Previous Update:  Dividend Stocks, Lunch Experiment Update #5

Thanks for following me and my “free lunch” experiment!

-MR

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