The story was picked up by the major news sources last year as a
"cute" human interest feature. You might have seen the headlines
like "How a Secretary Made and Gave Away $7 Million."
But for me, this wasn't some light news piece. This was a story
that resonated deeply with me.
I didn't know Grace Groner, from Lake Forest, Ill. From the
stories, she was a woman who lived frugally. Her passing was of
interest because her threeshares of
Abbott Laboratories (
grew into more than 100,000shares through decades ofdividend
reinvestment.In total, her
worth roughly $7 million
And while I didn't know Grace Groner, I did know Lillian Calistri.
The last time I saw Aunt Lillian was in 1990. I remember that a
nephew had the misfortune of addressing her as "Lillian." She
promptly looked us all in the eye and said, "You will continue to
call me Aunt Lillian." We were all more than 25 years old at the
time, but in Lillian's world, adulthood was no excuse for bad
Aunt Lillian taught homeeconomics at Charleroi High School in
Pennsylvania. After she retired in the 1950s, she moved to Tucson,
Ariz. I remember thinking it was nice that Lillian had been able to
live comfortably in her golden years -- aided by a teacher's
retirement and a nest egg from the 1952 sale of the family's ice
Here's the kicker: When Lillian died in 1993, her estate was worth
north of $5 million. Her broker was the only one who wasn't
shocked. "They should have that kind of discipline on Wall Street,"
reinvestment? You bet.
But there's something else to this story. And it's something that
can help you earn larger dividends soon -- helpful if you don't
have a lifetime to invest as Aunt Lillian and Grace did.
They may not have realized it at the time, but the women in these
stories chose their investments wisely.
Abbott Laboratories paid its first dividend in 1983. Adjusted for
stock splits, the pharmaceutical company initially paid a dividend
of $0.01562 per share, representing a
of just 1.1%. But during Ms. Groner's lifetime, Abbott consistently
grew its dividend. Its latest dividend was $0.44 a share -- 2,717%
greater than the original payout.
One of Aunt Lillian's investments was International
Business Machines (
. IBM dished out its first dividend in 1962. Since then, it has
grown its dividend by 64,900%.
Neither Abbott nor IBM had a particularly juicy yield at the time
these women bought their
. But they had something equally powerful: a corporate culture
dedicated to dividend growth. Throughout Grace and Lillian's
lifetime, these companies never cut their dividend. In good
economic times and challenging times, these companies found a way
to deliver ever-increasing income to their shareholders.
And those extra dividends add up a lot quicker than you'd think.
portfolio, I already have two lifetime dividend achievers.
If you put $5,000 into AT&T five years ago, you'd have earned a
4.7% yield at the time. That's $242 a year. But today, that $5,000
investment would be paying $405 a year if you simply reinvested
your dividends. That's an 8.1% yield on your original investment.
Altria is an even better story. Right now the shares pay a solid
6.2%. It's nothing to sneeze at, but thanks to the company's
commitment to dividend growth, $5,000 invested just five years ago
-- plus reinvested dividends -- is now earning 13.0%, or about $650
Action to Take-->
It's doubtful most of us will have decades and decades to invest
like Grace Groner or Aunt Lillian. But that doesn't mean we can't
see our dividends grow enormously in a span of just a few short
years by reinvesting dividends. Stocks like AT&T and Altria are
perfectly capable of doing this again, but you should also look for
other securities that could deliver a big paycheck down the
-- Amy Calistri
P.S. -- I mentioned above that AT&T and Altria are both in
my Daily Paycheck portfolio. But it takes a few more ideas to build
a portfolio that pays you daily...
So far the daily strategy has been working like a charm. In January
I earned $1,663.30 from 25 dividend payments. To learn how to get
started creating your own Daily Paycheck portfolio, I invite you to
read this memo.
Disclosure: Neither Amy Calistri nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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