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120 Don’t Make Me Say I Told You So

The Power of Reinvested Dividends

The dividend payments generated by a modest investment
might seem to be inconsequential initially, but, through the

magic of compounding, it won’t take long before they begin to
have a dramatic impact on your portfolio. After all, dividends

can be reinvested and used to purchase more shares, leading
to larger dividend checks. These larger dividends can then be

used to buy more shares, and so on. In time, even a small stake
in such stocks can grow into a tidy sum.

Impact of Dividend Reinvestment Over Time, 1998 - 2019
Growth of $10,000: Principal vs. Reinvested Distributions

$40,000
Stocks, Principal Only
Stocks, Dividends Only
$32,421
$30,000

$21,989
$20,000

$10,000

2000 2003 2006 2009 2012 2015 2018
Source: Morningstar, 2020. Stocks with dividends reinvested—Ibbotson® Large Company Stock Index; Stocks principal only—Ibbotson® Large Company Stock Index
Capital Appreciation Index. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance
is no guarantee of future results. Returns and principal invested in stocks are not guaranteed. Dividends are not guaranteed and are paid at the discretion of the stock-issuing company.

Chapter 3: You Must Have Growth In Your Portfolio