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How I Plan To Reinvest Dividends This September

Published Mon, 14 Sep 2020 06:00:00 -0400 on Seeking Alpha

Seeking AlphaPortfolio StrategyHow I Plan To Reinvest Dividends This SeptemberSep. 14, 2020 6:00 AM ET|| Includes: AAPL, AWK, HSY, KO, LMT, MCD, MKC, SBUX, Vby: José TriasJosé Trias Long-term horizon, Long Only, Value, Dividend Growth InvestingSummaryWhy it is profitable for young people to start investing sooner rather than later.
Trends can change faster than some companies can adapt. My portfolio needs to keep up.
How I think about future technological and consumer taste changes when I invest.
The Benefit of a Long Investment Horizon
The greatest advantage young investors have is time. Even one additional year of saving and investing makes an enormous difference for a young investor in the future. Here is an example of what happens if an investor saves and invests $1,000 per year growing at 10% for 40 years. The investor would end up with an account worth $490,966.


(Source: José Trias Spreadsheet. Data source: Google Finance.)
But look at what happens if the investor saves $1,000 for one extra year. The ending balance jumps up to $541,163. Thanks to the power of compounding, $1,000 invested today can make a $50,000 difference to your account balance over the long term.


(Source: José Trias Spreadsheet. Data Source: Google Finance.)
That's why it is profitable for young investors to start investing sooner rather than later.
The Risk of A Long Investment Horizon: Obsolete Products
While a long time horizon is beneficial for compounding, it comes with one big risk; the more time passes, the higher the chances for new products and technologies to replace the old. Owning shares of companies that don't keep up with innovation can produce terrible investment returns over the long term. The case of Xerox Holdings (XRX) is a perfect example. Xerox invented technologies widely used today such as the computer mouse, the first GUI (Graphical User Interface), and the first PC. Instead of capitalizing on those inventions,... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
COCA-COLA 55.11   33.6 1.64 1.60 2.94
LOCKHEED MARTIN 386.63   18.8 20.52 8.80 2.31
MCDONALDS 212.15   27.9 7.61 4.64 2.21
HERSHEY 151.26   26.2 5.78 3.09 2.03
AMERICAN WATER WORKS 121.76   37.8 3.22 2.00 1.66
STARBUCKS 92.06   32.6 2.82 1.44 1.59
MCCORMICK 157.81   30.8 5.13 2.28 1.46
APPLE 223.08   19.0 11.73 3.08 1.42
VISA 177.98   34.2 5.21 1.00 0.57

COCA-COLA - KO
COCA-COLA - KO  


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