Milestone Achieved – My First Dividend

 

I began my journey as a dividend growth investor about a month ago on March 30, 2015 when I purchased shares of Apple (AAPL) for my Dividend Empire Portfolio. If you haven’t read my post “Introduction To Dividend Empire,” the goal of this portfolio is to make regular investments in quality dividend growth companies over my lifetime with all dividends reinvested, with the hope that it will turn into a Dividend Empire for my children and beyond. Since making that first AAPL purchase I have invested in 6 additional companies, I started an additional dividend portfolio for my retirement and I’ve received FOUR pay raises already! After all of that action I was still missing something – I didn’t have any dividend payments!

Well I achieved a milestone today. I woke up to the following email from my broker:

Dear Ken,

We have credited your TradeKing account with the dividends paid by AT&T INC on 05/01/2015. You should see the credit from this transaction appear shortly on your Activity page, which is accessible via the My Accounts tab on the TradeKing website.

Best regards,
TradeKing

I received my first ever dividend payment from AT&T (T). Back on April 6, 2015 I purchased 100 shares of T just before the ex-dividend date. They have already rewarded me with a strong earnings report and some appreciation in share price, and today they sent $47 to my broker.

I plan on automatically reinvesting dividends into the company that paid the dividend in my Dividend Empire portfolio for the time being. The reason is that this portfolio is relatively small right now, generating ~$500 in dividends annually. It would take too long to accumulate enough cash from these payments to make a purchase and I want my money working for me immediately. In my Dividend Retirement Portfolio, where I have more funds, I will accumulate the dividends to make new purchases.

Here is the breakdown from my first AT&T dividend:

    • Quarterly Dividend: $0.47
    • Shares Owned: 100
    • Dividend Received: $47

 

  • AT&T Shares Purchased: 1.354
  • Resulting Income Increase: $2.55

 

 

This AT&T dividend is the first of many that will benefit my descendants. I’m currently writing this post from beautiful Yosemite National Park – on my first vacation with my son (he’s napping). It puts a smile on my face as I think about how much these choices I am making today will help my children in the future.

Father & Son in Yosemite

Father & Son in Yosemite

This AT&T dividend question raises a question I have for all of you dividend veterans. For my portfolio accounting, should I count this as a regular purchase (adjusting the cost basis, yield on cost, etc based on the purchase price of the stock) or do I count this as a “free” purchase, thus lowering my cost basis? I am leaning towards regular purchase since this is cash I could have used for anything. Your feedback is appreciated.

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11 Responses

  1. Daff says:

    I’m definitely not an expert so I can’t help answer your question. I just wanted to say how awesome it is that you are doing this for your kids. It will definitely become a fortune for them and especially their kids with the power of compounding.

  2. Ken Ken says:

    Thank you for your kind words, Daff. I agree and I look forward to seeing the results a few decades from now…

  3. Congrats Dividend Empire on your first dividend check! I know it’s a gratifying experience and I’m sure you will have many more checks to come in the future. I’m expecting my first check on 05/15/2015. Keep in touch.
    LOMD

    • Ken Ken says:

      Thanks, LOMD. It feels great to have one under my belt. I’m glad to hear you are getting one soon as well. I noticed you have some Realty Income Corp – is that the one you are referring to? I’m looking forward to that one as well.

  4. jeremy says:

    For breakeven I don’t count the cost of the new share. For taxes on the other hand I do.

  5. DivHut says:

    Congrats on receiving this first dividend payment. I know it is an exciting feeling when cash is put into your account without you having to actively do anything. For my accounting, I reinvest all dividends automatically and thus adjust my cost basis accordingly.

    • Ken Ken says:

      Thanks DivHut. I’m curious, if you received a $100 dividend and used it to purchase $100 in stock of a different company, would you say your cost basis is $0 for this new company? That is my dilemma. I am currently reinvesting into the same company because my portfolio value is low but I will eventually reinvest into different companies. I want to make sure I treat all of my positions the same so I can compare performance. Thoughts?

  6. They say you never forget your first :-) for dividends it is n different. My first dividend was TGT, $18.00. Best of luck moving forward.

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