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Subject:  Re: Your Time, Money, and Dividend Income Buffe Date:  12/30/2002  11:02 AM
Author:  jammerh Number:  88135 of 888689

Mark, in your original message you said,

"You can be patting yourself on the back for getting a 35% dividend yield..." which led me to believe you understood how you could be getting a 35% return on the cost of your original investment.

I'll try to explain what I mean by this a little more literally to see if we can agree on a starting point for discussion. If not we can just agree to disagree on this. It isn't my intention to persuade anyone who prefers another approach. It isn't my contention that a dividend/growth focus is for everyone.

What I mean by a 35% return is that the current yield expressed as a percentage of the cost of your original investment may have to be adjusted to account for splits in the stock price, and increases in the dividend over the years.

Over longer periods of time this can mean that the real return you are receiving on the cost of your original investment is much higher.

If the stock currently pays 2% but you bought it 20 years ago and the stock split 2-for-1, 4 or 5 times since, and the dividend payout has been raised each year, you may very well be receiving a rather nice return. I'll let you do the calculations because I'm not interested in quibbling over a percentage or two.

Actually, I'm not here to quibble at all. I've described the approach to the best of my ability and understanding.

If anyone agrees there could be some merit in the approach they're welcome to persue some of the reading I've suggested earlier. If not I don't see any point in us arguing past each other for any great length of time. If you prefer another approach that's fine. I'm not trying to convince you that this approach is better for you.

However, this is a valid approach, and it is one that is verified by many sources - some of which I've cited above.

If you have something to add, or some positive criticism I'd appreciate hearing it, but I'm not interested in engaging in a prolonged debate with professional money-managers who have a vested interest in telling people that they really can't invest on their own.

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