I was speaking with a friend the other day about stocks and they mentioned to me how they use to have some blue chip stocks. Anyways, as he was explaining to me how they worked, he mentioned that he used to get a large amount of cash from his dividends, about $4,000 per share and then he'd use that money to reinvest. Anyways, as you can imagine, I was a bit stunned and asked him how much the shares cost and he said around $80 a share. I asked him why weren't more people investing if they're getting these kind of magical returns?
Needless to say, he realized at that moment that he misspoke and clarified that that was what he was getting from all his shares and not from each share. Each share gave him about $2, twice a year.
So, after this conversation it got me to thinking about how much money would one make if the situation was as he initially explained it.
I wrote a little script to find out:
stock = 80
amount = 40
dividend = 4
y = 0
for i in range(20):
x = amount * dividend
y += x % stock
x = x / stock
amount += x
if y >= stock:
z = y / stock
y = y % stock
amount += z
print stock * amount
Based on our initial discussion, I wrote this python script. The parameters are currently set to how much one would make in 20 years after an initial investment of about $3200 (purchasing enough shares so that your dividends allow you to by at least 2 shares a year without your personal investment). Assuming $2 half yearly, it's $4 a year and you eventually do pick up some momentum. Based on your initial investment, all other things being equal (not accounting for the cost of the stock going up or down) you will have about $8,400 after 20 years.
Pretty unimpressive right? Well, even if you decided to invest a couple thousand each year it will still result in relatively unimpressive results. Now, how about if we got $4,000 per share? How much would we have? Well, the figure after 20 years is insane, so let's just look at how much you'd have after 5 years: $1,104,080,803,200. If I'm not mistaken, that's over one trillion dollars.
I sure as hell know which option I'd rather