Wednesday, September 23, 2015


It's always nice when one of your stocks decides to raise dividends to shareholders and you see an increase in yield on dollars invested.  But there's another way to boost yield by reducing your average cost per share.  How do you do that?  By taking advantage of dips in the market to pick up more shares at a lower price.  When you purchase additional shares of a stock you already own at a price lower than your original price, you reduce the average cost per share, which in turn boosts the overall yield on the stock.

How much can you expect to reduce average cost per share?  It depends on what price you bought in and how far the market has dropped when you decide to buy more.  I recently purchased additional shares in AOD and PHK.  Both stocks are down from my original buy in price.  With the new shares purchased, I reduced my average cost per share on AOD by a little over 8% and reduced average cost per share on PHK by a whopping 30%!  Of course before you decide to buy more shares you'd want to make sure the price is down because of a general downturn in the market and not due to any problem with the company you're invested in.  

By reducing average cost per share, you also position yourself for a much quicker recovery when the stock market goes back up.  Whether you buy in at an original low price or take advantage of market downturns to reduce average price per share, the less you pay per share, the more likely you'll see good returns.  

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