When watching the ups and downs of my Llamafolio stocks, I always focus on just the share price. And in that regard, things aren’t looking too shabby at all. Currently my stocks are worth a total of $3017.78. That’s a nice return in a short period from the $2800 I originally invested. However, when I logged into my Zecco account today I noticed a bit of cash sitting there as well. What in the world? As it turns out, two of my stocks paid out dividends, which were deposited into the cash portion of my Zecco account.

On March 28th, Bank of America paid out a dividend of $8.32 into my account. Not too bad at all. And then on April 1st, Coca Cola, Inc paid me $3.04 in dividends. Now I’m not quite sure how dividends are calculated - I’d love for someone to point out how exactly they work. But the bottom line is that my total account value is now $3029.63. That’s a $229.63 increase, or 8.2% since I started investing in March. I can get used to 8% returns every month :) Don’t worry, I don’t expect that to continue every month.

Dividends are a great bonus

I buy stocks if I think they are a good value. In other words, I’m looking for capital appreciation. If that stock happens to pay out dividends too - that’s a bonus for me. Having a few dividend paying stocks in your portfolio is a great idea. In addition to generating actual cash, these type of stocks tend to be more solid than stocks that don’t pay dividends. After all, a company has to be confident that it will continue to generate cash to pay those dividends - small, volatile companies don’t fit the bill.

Dividend Reinvestment

If your brokerage offers dividend reinvestment, you should participate. Basically what happens is that when you get paid a dividend, the money is used to purchase additional shares of that company, rather than going to your cash account. In other words, it’s automatically reinvested. Currently I don’t believe Zecco offers this feature. But then again, free trades outweighs the lack of a few fancy features. However, if you’re using a more full-featured broker, automatic reinvestment will save you time. Also, it’ll help make sure your investment grows to it’s full potential.

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