Thursday, April 26, 2012

REINVESTING PROFITS FROM AEA BUYOUT

Received payment for the buyout of AEA shares reducing dividend payments by 4 per year.  To replace the lost dividends, I placed an order to reinvest the money in EOI which pays monthly dividends.  Not only will this add 12 dividend payments, replacing the 4 quarterly payments lost from AEA and adding an additional 8 payments, but each monthly dividend from EOI will be close to the amount earned quarterly from AEA.  So not only will it bring my total dividend payments per year to 192, but it increases the amount of income on this portion of my portfolio to roughly 10 times what it was earning before!


AEA was also what I call a "free stock", which means it is an investment that I bought low, sold enough shares after the price went up to pull out my original investment and kept the remaining shares.  So this means the money I invested in EOI is pure profit from AEA, so in a sense I'm buying this investment with passive income only.  While this is not something you can do every day, it's a great way to make money when the opportunity presents itself.  


Which leads me to my next possible ploy for speeding up stock purchases to get to my goal of 365 dividend payments per year. Right now I'm sitting on some large capital gains on multiple stocks in both my taxable and retirement accounts.  I may decide to pull out some of the profits to purchase shares in additional dividend stocks, increasing the total number of dividend payments per year and accelerating compounding of my investments.

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