by: Charles M. O'Melia
I would like to share with the reader an article printed in the financial section of U.S.A. Today on
March 7, 2003 which exemplifies the awesome power of a stock dividend.
MICROSOFT TO ISSUE FIRST DIVIDEND TODAY:
Microsoft investors will get their first payday today, when the tech giant shells out its
first dividend. At 8 cents a share, the dividend will cost the company $850 million. Co-
founder Bill Gates, who owns about 1.2 billion shares will receive a dividend of $96.5
million. The dividend marks a shift for Microsoft, which had long hoarded cash - to the
tune of $43.4 billion for research, acquisitions and legal claims.
After reading this article I couldnt help thinking about a report, which I believe stated that there
were an estimated 33 million people in America living under the official poverty level. Bill
Gates, by giving away his Microsoft dividend to those living under the poverty level could begin
to create 96 millionaires, year after year after year. What a boost to the economy that would be!
Imagine all those new millionaires every year spending money on something other than food,
Salvation Army clothing and shelter.
Bill Gates (by giving away his Microsoft dividend) could begin to eliminate all the hardships for
those people currently living under the poverty level. Of course, I would probably start feeling
sorry for all those people who were living right at the poverty level. I could almost hear Ma
telling Pa now, If we only didnt sell those $40.00 worth of aluminum cans, we could have been
millionaires right now. Then again, those newly created millionaires would probably begin
buying computers filled with Microsoft software and Bill Gates would start getting his money
back. And, if that wasnt enough, the newly created millionaires probably hadnt read my book!
They would probably start using their computers to start day trading in the stock market and end
up right back where they started. Holy moly! I better finish this book or they wont stand a
(Note: Bill Gates and family have already given millions and millions to charity. It was
announced on CNBC that on April 24, 2003 Bill Gates had just donated 28 million dollars to S.
Africas AIDS program.)
Microsoft had just recently (10/15/03) raised their dividend from eight cents a share to sixteen
cents a share, giving Bill Gates, I would imagine, a 96.5 million dollar a year raise.
As an individual investor in the stock market for almost 40 years I have found that companies
that raise their dividend every year outperform those companies that stop or trim their dividends.
For example, Dominion Resources had raised their dividend from 1984 to 1994 every year, and
then stopped in 1994. Since then the company continues to pay a 64 cent a share dividend, with a
dividend yield of around 4 percent a year. The stocks performance since 1994 has been
mediocre, rising in price from the 40 dollar range in 1994 to the 60 dollar range in 2004. Now
compare that stocks performance with Comerica, a company that has raised their dividend for the
past 35 consecutive years. In April of 2003, Comericas stock price was around 37 dollars a share,
paying a dividend yield of around 5%. Today, July 20, 2004 the stock closed at $58.28 a share,
paying a dividend yield of 3.57%. A $21.00 a share move in the stock in 1 year and 3 months
and in March of 2005 the company will probably raise their dividend again for the 36th
consecutive year. (By the way, Comericas stock performance for the past 14 years has returned a
little better than 15% a year, compounded annually.) The simple point Im trying to make is too
invest in those companies that have a history of raising their dividend every year. There are
hundreds of them. A company that just pays a dividend is not good enough; find those
companies with a historical record of raising their dividend every year.
For more excerpts from The Stockopoly Plan please visit www.thestockopolyplan.com
This article was posted on July 20, 2004