Dividend Stocks, Free Lunch Experiment #7

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Dividend Stocks, Lunch Experiment Update:

Dividend Experiment

Dividend Experiment Update #7

This month, capital appreciation in the value of the stocks in the experiment has overall risen because of EV Energy (EVEP).  Ironically, EVEP is also the stock that I bought the least amount of.  Surprisingly, the market value of EV Energy has just surpassed the market value of ANH.  This is surprising because ANH cost me double the amount as EVEP did.  In fact, the share price of EVEP is starting to worry me a bit; it’s starting to look frothy so I’ll probably review the financial stats to make sure it’s still solid and not overbought.

The other two stocks in the experiment have remained close to the market values that they were last month.

Background:

The Free Lunch Experiment, which invests in dividend stocks so that I can use the yield to pay for my weekly lunches, is my first true experiment here at MoneyReasons.com and was started with the article called: “Paying An Adult Allowance, A Lunch Experiment”.  As explained in the article link in the preceding sentence, the money used in this experiment is free money because I would have spent it on eating lunch out with friends at work anyway (and yes my friends still go out everyday).  This means that if I were to lose all the money in this experiment tomorrow (very unlikely), I would really be out nothing!

By having free money fund this experiment, I’m able to take additional risks that I normal wouldn’t consider.

In some perverse way, one could consider the experiment money a form of emergency money, but I prefer not to make that claim…

Stock Name Anworth EV Energy Chimera
Stock Ticket ANH EVEP CIM
# of Shares 260 45 600
Orig. Price $7.84 $23.25 $4.01
Curr. Price $6.95 $42.33 $4.07
Orig Cost $2,038.14 $1,046.25 $2,404.80
Curr Value $1,807.00 $1,904.85 $2,442.00
Annual Yield 13.24% 7.15% 17.69%
Actual Dividend $59.80 $34.07 $108.00
Total Dividends $807.48
52 weeks 52
Dividend / week $15.53
Total Gain in
Stock Apprec. $664.66
% Change 12.11%
Amt Loaned to myself: $1,726
Amt paid back to date: $1,299
Amt Still Owned: $427

Priming the Pump:

While the money involved in this experiment is technically free money, to expedite the stock purchase funding I’ve borrowed money from my checking account a few times just to speed up the process (thus priming the pump so to speak).  Of course I paid myself back too though.  Currently, I still owe myself $427.

Evolution of the Experiment:

Now that the experiment is established and generating a decent dividend stream, after I pay off my loan to myself in mid-March 2011, I may cut back on the amount that I borrow from my checking account or not borrow any more from myself at all.  This would mean that I would just save the money by not eating out first, then purchase additional stock after I save up enough to make a decent buy.  I many use some of my dividend money to help purchase future shares too.

Hopefully, by the next monthly update I’ll be able to provide more details about the specific of the future changes to this experiment.

-MR

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9 thoughts on “Dividend Stocks, Free Lunch Experiment #7”

    • Yeah, it’s been a fun experiment. Some of the dividend stock I’m in will reduce their dividend once the fed raises their interest rate, but until then, I’m having a ball…

  3. You and other pf bloggers have encouraged me to dig deeper into dividend stocks, and I am excited about it. I don’t know how many free lunches I will get, but it will be fun to watch the dividends pile up.

    By the way, your investments can be considered emergency money in my opinion. You could have access to it in a few days in case of an emergency. So it isn’t sitting in a minimal interest-bearing account- it is still money you have at your disposal.

    • Great to hear 🙂

      This is just the beginning for me! I plan on buying a bunch of dividend yielding stock this year peg to certain expenses (like Christmas spending, vacation and blogging). I will be awesome!

      I agree on using the stock in case of a real emergency too. It only makes sense 🙂

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  5. I like how you have made a game of it. I do that to help me reach my goals. Dividend stocks or mutual funds are a good way to invest , particularly in these volatile times.

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