Tag Archives: Lunch Experiment

Dividend Stocks, Free Lunch Experiment #9

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Lunch Experiment Update:

Dividend Experiment Cafe

Dividend Experiment Update

I have finally paid off the loan to myself that I borrowed to buy the latest stock that I bought (CIM).  This last repayment time to myself went really fast.  In fact, it went so fast that I’m done borrowing money from my checking account to fund my stock purchases.  From now on, I”m only going to use the money that I save, and perhaps money from the dividend checks received from the fund itself.

And Now on to the Analysis of My “Lunch Experiment” Investments:

First let me say that I”m excited to say that EVEP has doubled for me (woo hoo)!  Unfortunately, it’s also the position I have the lowest initially investment in (boo).  Ironically, stock appreciation isn’t what I’m really shooting for…  not that I’m complaining!  But the real game in this experiment is reoccurring dividend payouts.

  • Overall, the “Total Return” of my investments since investing in 2009 is up 19.31%.  Note, this number is not per year, but simply the percentage gain of what was originally invested vs the current value.  In case you are wondering, yes, I do follow the KISS principle.
  • The “Cumulative Value” of my investments equal $6,548.90!  This is money that would have went to the restaurant owner and to the waiter in tips.  But now it’s sitting in my brokerage account earning me a dividend.
  • With a dividend of $14.88 a week, I can easily afford to go out twice a week with the guys at work.  Especially if I buy cheaper meals such as soup.  Believe it or not, soup at a decent restaurant actually tastes great!

Experiment Observations To Date:

This experiment will span 2 years.  I’ve done much better than I anticipated!  While my dividend stream is extremely high risk, the money involved is practically free money since I would have been spent on dinning out at lunch anyway!  It’s also not diversified very well either!  But this is an experiment, and the normal nature of such experiments come with certain levels of risk.

So with this particular experiment, I’m shifting gears into overdrive for a smoother ride until the end of the two years (2 years is the length that I initially defined as the duration of this experiment).

If you have read this experiment from the start, thanks for hanging with me, it’s been a great ride to date!

Do you have any questions about my experiment and more importantly, do you see the value in doing something similar?

-MR

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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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Dividend Stocks, Lunch Experiment Update #4

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It’s time for my Dividend Stocks Update on my Lunch Experiment!

For the first 2 stocks in my experiment, I borrowed money from my checking account so I could seed the money for the initial investment.  But since I fully paid myself back on the first two stocks (ANH and EVEP), I decided to take borrow more money from my checking account so I could purchase some shares of another dividend stock. 

This time I chose a dividend stock called Chimera (another REIT).  It’s dividend yield is a ridiculously high 17%.

Initially, I was only going to borrow $1,000, but I decided to bumped the amount up to $2,000. 

Since I’m getting money from my other dividend yielding stocks for lunch, I decided to bump up my weekly savings rate to $60.  So I should be able to pay myself back in less than 33 weeks (sometime in mid-May 2011).

Here is my Dividend Stocks for my Lunch Experiment Spreadsheet:

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 $7.16 $34.26 $4.14
Orig Cost $2,038.14 $1,046.25 $2,404.80
Curr Value $1,861.60 $1,541.70 $2,484.00
Annual Yield 13.87% 8.85% 17.27%
Dividend / year $258.20 $136.44 $428.99
    Total Dividends $823.63
    52 weeks 52
    Dividend / week $15.84

 

Overall, I’m pretty please with the outcome of this experiment, but now let me explain some things about my experiment:

  • The money used in this experiment is basically “Free Money” because it would have been spent on lunch going out with the guys!
  • Since it’s “Free Money“, I can afford to lose it all of it if it came down to that!  Yes, I would cry a bit at first, but its money that would have been wasted on eating out anyway.
  • Since I can afford to lose this “Free Money“, I can take risks that I normally wouldn’t take.  I usually don’t recommend anyone buy a stock with a 17% annual return.  This dividend yield will come back to earth eventually!
  • This is purely for fun, that’s why I call it an experiment 🙂

And now for some interesting facts about my experiment results:

  • EVEP is up almost 50% from where I bought it at!  To bad I only bought $1,000 dollars worth.
  • ANH is down 8% from where I bought it at!  To bad I bought $2,000 dollars worth of this stock (booo)
  • CIM recently raised it’s dividend payout for the quarter by 1 cent.
  • The guys try to convince me to go out to eat with them more, but I’m content on doing the library thing.  Occasionally, I’ll go with them for sushi!  Sushi is my kryptonite when it comes to eating out…
  • I get a huge kick when I see the dividends hit my online brokerage account. 
  • Yes, I am nervous about the tax cuts expiring though!  Perhaps I’ll have to move my lunch experiment to my roth ira account…
  • Doing a real documented experiment like this has been a great experience!

I’m having a great time with this experiment, so far I figure that if the dividend yield rate stays the same (which is highly unlikely), I would be able to go out to lunch twice a week with the guys! 

Ironically, I no longer have a desire to go out to eat at lunch and spend so much money.  In fact, now I mainly go to the library at lunch and read other personal finance blogs and work on this blog!

What do you think of my lunch experiment and my progress?  Do you think I’m crazy for going with such a high stock dividend yield?

-MR

 

Related:

Check out the next update in my Lunch Experiment, #5.
Or go back to the previous update via my Lunch Experiment #3.

Lunch Budget Experiment Update #3

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I haven’t talked about my Lunch Experiment or Adult Allowance for quite a while, so I thought it was time for an update!

The REIT stock “ANH” dropped 11% since I bought it, but surprisingly with the dividends received so far, I’ve still even on the amount invested overall…  I also purchased a small position (only 1/2 of what I put in ANH) in a stock “EVEP” (an energy stock) that also provides a dividend. 

The EVEP dividend only pays 8%, but the stock is up almost 40%, so from a total stock evaluation stand point I’m up a combined total of a little over $200.

Okay, to summarize, the valuation of the stocks are actually up which is great, so I can count the dividends from both stocks entirely.  The amount the dividends per week comes to $8.00 (I can only buy soup when I eat out, but it’s a start).

So my experiment so far is successful.  I now generate enough income for 1 day out of the 5 work days for a lunch paid for by the dividends (yes, I know I’m not considering taxes…)!  I decided to keep doing the experiment!  I also decided to diversify into other dividend yielding stocks.  I know that the stock ANH will probably decrease their dividend in the near future, so the more I can diversify the better!

To “prime the pump” I borrowed money from my account to start this, and I’ve been slowly paying myself back.  I still have 8 weeks left, then I will start saving money again for investing in more stocks for my Lunch Experiment!

While the amounts may seem trivial, all great things start out small, and so did this!  You see, this is my first true “Dividend Fund“!!!

Eventually, I plan on creating a Christmas, Vacation and “Real Estate Tax” Dividend Funds!

Have you considered creating such Dividend funds or do you have alternative ideas? 

-MR

Related Posts:

Dividend Stocks, Lunch Experiment Update #4

Lunch Budget Experiment Update #2

Lunch Budget Experiment Update

Paying An Adult Allowance