It has been reported that someone asked Albert Einstein to name the greatest invention in human history and he simply replied, “compound interest.” According to Einstein, “compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” By investing in certain DRIPs, you can take advantage of Einstein’s Law of Compound Interest. For details and how to implement this strategy on your own, read The Best Kept Secret to Financial Freedom, available through our website, www.JeffersonianGroup.com, or directly from Amazon.com.
For example, if you put $10,000 in a DRIP paying a 5% dividend and the Company increases its annual dividend payments by 10% each year, so that in year two you’re earning 5.5%, in year three you earn 6.05% and so on—you’ll be sitting on well over $5 million at the end of 30 years. And this doesn’t even factor in any growth or increase in the share price!
Again, you don’t have to be wealthy, and you do not need financial advisors, money managers, or stockbrokers to invest in DRIPs. Grace Groner graduated from Lake Forest College in 1931 and went to work as a secretary at Abbott Laboratories. In 1935, she invested $180 in three shares of Abbott Laboratories (ABT) and reinvested the dividends for the next 75 years. When she passed away in 2010, her $180 original investment was worth $7 million due to stock splits and reinvested dividends.
Anne Scheiber, who worked as an IRS Auditor for 23 years turned a $5,000 investment made in 1944 into $22 million by the time she passed away in 1995 at the age of 101. She acquired stocks of companies like Coca-Cola (KO) and reinvested the dividends for decades.
Ronald Read, a World War II veteran with a high school education, worked as a gas station attendant for 25 years, then as a janitor for 17 more years before retiring at the age of 76. When he passed away at age 92 in 2014, he had a portfolio of great businesses (e.g., Johnson & Johnson, Procter & Gamble, Colgate-Palmolive) worth $8 million by reinvesting the dividends.
You don’t have to wait 30-to-75 years to become wealthy. According to professors Rubin and Spaht, “For those investors who adopt ten and fifteen year horizons, [investing in certain DRIPs] will lead to financial independence for life. Regardless of the direction of the market, a constant and growing dividend is a never-ending income stream.”
Real wealth is a cash flow generated from passive investments (e.g., DRIPs) that exceeds your expenses necessary to support the lifestyle of your choosing. You do not have to go to work. You may wake up at 6:00 am or noon. You may travel and live anywhere, and your passive income/cash continues to flow into your bank account 24/7 regardless of whether you are awake or asleep.
Once you become financially independent, you may choose to continue working; you may start another career or business; you may decide to go back to school; you may start a charitable foundation; or you might just want to do nothing but travel and see the world. Once you have obtained financial freedom, you are no longer a slave and can do whatever you want. The choice is yours.
For a complete explanation of the DRIP strategy and how you can easily implement the program yourself without financial planners, brokers, or money managers, read The Best Kept Secret to Financial Freedom, Amazon.com: The Best Kept Secret to Financial Freedom eBook : Beard Jr., Robert G.: Kindle Store.
We encourage everyone to buy a DRIP a week or at least monthly. Get your children and grandchildren involved early. It doesn’t matter if you buy 10 shares or 100 or more shares at a time, just do it! If you follow the program, you can become financially independent within 10-to-15 years regardless of the direction of the stock market. You are buying an income stream or dividends that will ultimately replace your wages or self-employment income; you are not buying a stock at a price hoping that someone else will come along later and pay you more for it.
Here’s our current listing of Great Businesses to Buy Now:
1) Johnson & Johnson (JNJ) - $164.38 per share, yield 3.01%, paid/raised 61yrs
2) ExxonMobil (XOM) - $112.64 per share, yield 3.36%, paid/raised 41yrs
3) Kimberly-Clark (KMB) - $146.91 per share, yield 3.32%, paid/raised 51yrs
4) PepsiCo (PEP) - $177.34 per share, yield 3.05%, paid/raised 48yrs
5) Archer Daniels Midland (ADM) - $59.47 per share, yield 3.33%, paid/raised 46yrs
6) Franklin Resources (BEN) - $19.13 per share, yield 6.36%, paid/raised 43yrs
7) Enbridge Inc (ENB) - $40.39 per share, yield 6.71%, paid/raised 26yrs
8) Int’l Business Machines (IBM) - $200.74 per share, yield 3.30%, paid/raised 28yrs
9) Medtronic PLC (MDT) - $89.89 per share, yield 3.11%, paid/raised 46yrs
10) T Rowe Price (TROW) - $101.69 per share, yield 4.76%, paid/raised 37yrs
11) Bank OZK (OZK) - $39.92 per share, yield 3.90%, paid/raised 27yrs
12) Enterprise Products Partners (EPD) - $28.87 per share, yield 7.23%, paid/raised 26yrs
13) Prudential Financial (PRU) - $113.25 per share, yield 4.42%, paid/raised 15yrs
14) Cisco Systems (CSCO) - $48.50 per share, yield 3.26%, paid/raised 13yrs
15) Main Street Capital (MAIN) - $48.63 per share, yield 5.97%, paid/raised 13yrs
16) AbbVie Inc (ABBV) - $193.40 per share, yield 3.21%, paid/raised 13yrs
17) Arbor Realty Trust (ABR) - $13.40 per share, yield 13.14%, paid/raised 11yrs
18) Associated Banc-Corp (ASB) - $21.25 per share, yield 4.03%, paid/raised 12yrs
19) Cogent Communications (CCOI) - $73.18 per share, yield 5.45%, paid/raised 11yrs
20) Tyson Foods (TSN) - $65.87 per share, yield 3.01%, paid/raised 12yrs
21) HP Inc (HPQ) - $33.82 per share, yield 3.20%, paid/raised 14yrs
22) MPLX LP (MPLX) - $42.62 per share, yield 7.91%, paid/raised 12yrs
23) Gaming and Leisure Properties (GLPI) - $51.52 per share, yield 5.90%, paid/raised 10yrs
24) NextEra Energy Partners (NEP) - $24.20 per share, yield 14.60%, paid/raised 9yrs
25) Hess Midstream LP (HESM) - $35.89 per share, yield 7.40%, paid/raised 7yrs
26) Best Buy Co Inc (BBY) - $98.50 per share, yield 3.78%, paid/raised 21yrs
27) CubeSmart (CUBE) - $51.84 per share, yield 3.99%, paid/raised 15yrs
With respect to the above DRIPs, the stock prices will most likely have changed by the time you are ready to act. Accordingly, only acquire the DRIP stocks that have a 3% or greater yield at the time of your purchase.
If you are interested in becoming financially independent, desiring freedom from the 9-to-5 daily grind within the next 10-to-15 years, keep buying DRIP stocks. If you are already retired and don’t want to out-live your money, create a DRIP portfolio, which may allow you to pass on generational wealth. And, if you want your children and grandchildren to obtain financial independence early in their lives, no matter what job or career they choose, and no matter how many mistakes they may make along the road of life, get them started early!
Dum Spiro Spero—While I breathe, I hope.
Slàinte mhath,
Robert (Mike) G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.