The Magic of Rising Dividends

There are a couple of additional benefits from a company that regularly increases its dividend. First, the longer one holds their shares, the higher the yield received on one's original investment. Second, the longer one holds their shares the cumulative dividend effect may kick in.

The Shareholder Yield on Cost table below illustrates these benefits. For example: if you purchased your Realty Income shares on 10/18/94, your yield on the original price of your share has risen to 21.9%. What this means is that if you were to sell your shares today, you would have to find an investment that yielded 21.9% to receive comparable income.

The cumulative dividend effect is similar in that the longer one owns shares, the less remaining original principal one has invested in the company. You can see that after 10 years, a Realty Income shareholder has received back nearly 100% of their original dollars invested via dividends from the company. These combined benefits are only available with companies that pay reliable dividends that are regularly increased over time.

The yield benefit is calculated by a formula called the Yield on cost. This formula is simple—take the current dividend and divide it by the original price per share of your investment. Determine your current yield on cost with this simple calculator

What price per share did you pay for the share you own?

Current Realty Income Annual Dividend:

$1.74975

Current Yield on Costs=
(Realty Income)