I own stock. I own shares in several companies actually. I have 7 shares in Wendy's, 7 shares in Tim Horton, and a lot more than that in Caterpillar. However, I don't play the stock market and I didn't even buy those stocks for myself. They were all gifts. That's how my family rolls.
A couple of years ago I thought it would be a good idea to combine my assets by selling my Wendy's and Tim Horton stock and putting the money towards more Caterpillar stock. This unfortunately is very difficult. I would have to transfer the stock to another broker who could then make the exchange. Way too much of a hassle for a common layperson like myself.
The point of this story is to look at the stock dividend situation. As far as I can understand, stock dividends are a percentage of your stock that makes profit. With Caterpillar and Tim Horton, I have it set up so that my dividends are automatically reinvested into more stock. With Wendy's however, I get quarterly checks in the mail.
Sounds great right? No. With only 7 shares each, these dividends are approximately $0.14-$0.16 each. I called Wendy's the other day and they do not have dividend reinvestment options. That means I can't sell the stock and I can't reinvest the dividends. I am stuck with quarterly checks so small that I have to go to the bank to cash them because the ATM won't accept them.
Realizing all this, I decided to do a quick study on cash-in/cash-out for amusement purposes. Here goes:
Approximate dividend check - assume $0.15 every three months = $0.60 per year
Current cost of a tall vanilla mocha = $4.00
Cost of vanilla mocha 2-3 years ago = $3.82
Assume future cost of vanilla mocha at $4.20
$4.20 / $0.60 = 7
That means that with my dividend checks I can get one tall vanilla mocha in 7 years.
Now, let's look at the cost associated with these dividend checks:
Distance from my office to nearest BECU branch = 2.0 miles
At 30 miles per gallon, that equals 0.07 gallons of gas
Assuming $4.00 per gallon of gas, that comes out to $0.26 or approximately $0.50 round trip per dividend check.
The checks are good for six months so let's say I combine trips and only go twice a year. That means a $1.00 per year cost for a $0.60 return. Are you following me?
Therefore, it doesn't actually matter that I can get a coffee every seven years because it's costing me more money to cash the checks then they're even worth.
One might ask at this point, why bother? Because if I didn't cash the checks, they would win. I'm not entirely sure who "they" are, but I'm not giving them a tall vanilla mocha every seven years.
Thursday, July 19, 2012
Sunday, July 15, 2012
It's okay to be a chicken...
Norse mythology describes Thor as being the god of thunder and lightning. Thor's tool/weapon was a hammer and when he used it, it caused the thunder and lightning. Now I don't believe in Thor, but I do believe in God, and sometimes I wonder if He doesn't have a hammer of His own...
The other night I was enjoying a large bonfire at a friend's house after a long week of work. It had been raining off and on all day despite the weather forecast calling for clear skies. One person at the bonfire thought it was the same storm that was continuously circling the area. This would not surprise me with the geography we have here.
Sure enough, after 20 minutes of enjoying the bonfire, a distant rumble of thunder was heard. A friend exclaimed, "here it comes again...". Nobody moved however, since a distant rumble is nothing to be fussed about.
The rumblings became more frequent however as time progressed. Nobody even suggested the idea of retreating indoors though. We're tough. It's not that big of a deal. Then we see the first flash. That makes the thunder a lot more real. At this point I'm remembering all of the things we had to do as kids when there was a thunderstorm. My mother was a bit uptight about lightning safety and if we came home during a thunderstorm and parked in the garage, we were not allowed to get out of the vehicle because we'd have to step on the reinforced concrete garage floor that might conduct electricity should the garage be struck.
Needless to say, as the thunder draws nearer and no one is moving, I'm beginning to wonder if we're all just "tough" or really foolish. My Dad used to say there's a fine line between tough and numb...
There's another flash of lightning and we all look around to see if anyone else is going to begin the migration indoors. But nobody wants to be the first apparently. Our fearless leader, Gertrude, looks around at the girls and proclaims that we're fine since no one's hair is standing on end. This, strangely, does not comfort me.
Not two minutes later, God found His hammer. A bright flash of light (at which point I start counting in my head until the thunder comes to see how far away the storm is), but I did not make it past 1. CRRRAAACK! I thought the sky was split in two. I realized then that we had all crossed the line from tough to numb. I grabbed my stuff, said I didn't care if they all thought I was a chicken, but I was going inside and I scuttled towards the house as quick as I could with a couple other smart chickens right behind me. No sooner had we set our stuff down in the living room that God found the water spigot and turned it on full. I looked out at my "tough" friends as they stared hopelessly at the sky, becoming quickly drenched to the skin and realized that sometimes it's okay to be a chicken.
The other night I was enjoying a large bonfire at a friend's house after a long week of work. It had been raining off and on all day despite the weather forecast calling for clear skies. One person at the bonfire thought it was the same storm that was continuously circling the area. This would not surprise me with the geography we have here.
Sure enough, after 20 minutes of enjoying the bonfire, a distant rumble of thunder was heard. A friend exclaimed, "here it comes again...". Nobody moved however, since a distant rumble is nothing to be fussed about.
The rumblings became more frequent however as time progressed. Nobody even suggested the idea of retreating indoors though. We're tough. It's not that big of a deal. Then we see the first flash. That makes the thunder a lot more real. At this point I'm remembering all of the things we had to do as kids when there was a thunderstorm. My mother was a bit uptight about lightning safety and if we came home during a thunderstorm and parked in the garage, we were not allowed to get out of the vehicle because we'd have to step on the reinforced concrete garage floor that might conduct electricity should the garage be struck.
Needless to say, as the thunder draws nearer and no one is moving, I'm beginning to wonder if we're all just "tough" or really foolish. My Dad used to say there's a fine line between tough and numb...
There's another flash of lightning and we all look around to see if anyone else is going to begin the migration indoors. But nobody wants to be the first apparently. Our fearless leader, Gertrude, looks around at the girls and proclaims that we're fine since no one's hair is standing on end. This, strangely, does not comfort me.
Not two minutes later, God found His hammer. A bright flash of light (at which point I start counting in my head until the thunder comes to see how far away the storm is), but I did not make it past 1. CRRRAAACK! I thought the sky was split in two. I realized then that we had all crossed the line from tough to numb. I grabbed my stuff, said I didn't care if they all thought I was a chicken, but I was going inside and I scuttled towards the house as quick as I could with a couple other smart chickens right behind me. No sooner had we set our stuff down in the living room that God found the water spigot and turned it on full. I looked out at my "tough" friends as they stared hopelessly at the sky, becoming quickly drenched to the skin and realized that sometimes it's okay to be a chicken.
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