What? You’ve never heard of Grace Groner? Take out your Google machine and type her name into your browser. You’ll see several pages filled with articles describing her rags to riches story.
Born in Lake County, Illinois in the early 1900’s, Grace Groner had a difficult upbringing. Orphaned and adopted, she graduated from college and took up a job as a secretary, an accomplishment for working women of her time. She stayed on at Abbott Laboratories for 43 years until her retirement. In 1935, Grace made a decision that would secure her financial future. She purchased three $60 shares in Abbott Laboratories. She held onto those shares through the years, through ups and downs and stock splits and simply collected and reinvested her dividends. Over her lifetime, that $180 investment grew to more than $7,000,000! Who would have thought such a simple approach could deliver such incredible results?
Grace Groner’s story has inspired investors all over the world, because anyone can do it. The earlier in life you start, the faster and larger your nest egg will grow for you to enjoy in your twilight years. That said, it’s never too late and the best time to start is always now.
Begin by purchasing shares in a great business, like Abbott Labs that pays a regular dividend and has a track record of raising its dividend every year. Just like Grace, reinvest the dividends quarter-after-quarter, year-after-year until you really need them.
VectorVest makes it easy to find these babies, as our Founder Dr. Bart DiLiddo likes to say. VectorVest gives us valuable dividend analysis tools including two exclusive indicators that are among my favourites in our VectorVest software.
First is DS, Dividend Safety. Calculated on a 0-99 scale, a high DS score provides the assurance that regular cash dividends will be declared and paid at current or higher rates for the foreseeable future. Unlike the commonly used dividend payout ratio which is just a one-day snapshot, VectorVest’s Dividend Safety provides insight by drawing on the historical consistency of previous dividend payments in addition to the payout ratio of dividends compared to earnings.
Second is DG, Dividend Growth, a forecasted annual growth rate of a company’s dividend based on historical dividend payments and dividend predictability. It is a subtle yet important indicator of a company’s financial performance. It also provides insight into the board’s outlook and the company’s ability to increase its earnings.
So, will Abbott Labs (ABT) deliver similar returns over the next 20 to 30 years? One never knows for sure, but I like its chances. Why? As of Tuesday, May 7th, ABT had a DS of 76 which VectorVest describes as “Excellent” in the Full Stock Analysis Report.
Its DG was 12%, above the current average of 7% for all the stocks in the US database, as represented by the VectorVest Composite, and, importantly, well above the current rate of inflation. As is often the case with high DS stocks, ABT’s Relative Safety, RS, score is also very good, 1.25, on a scale of 0.00 – 2.00. It indicates strong financial consistency and predictability. A look at a weekly graph shows price and earnings have been trending steadily higher for many years. Add dividends to the sub-graph and you can see that ABT has increased its dividend every year since at least 1995. ABT is in VectorVest’s DRIP 5-9 Years WatchList, so it now offers a DRIP.
There are plenty more of these gems in both the US and Canada databases. VectorVest’s exclusive indicators and UniSearch makes them easy to find so that you too can start BUILDING WEALTH LIKE GRACE GRONER.
VIDEO RECORDING: To learn more about investing like Grace Groner, please click on the following YouTube link:
SPECIAL NOTE: If you want to learn more about dividend investing, register now for the May 31/June 1 VectorVest Toronto 2-Day Investment Seminar. Mr. Jim Penna, VectorVest’s Manager of Retirement Services, will explain the importance of dividend investing in a special presentation titled, Worry-Free Investing. There’s still time to register and take advantage of the Early Bird $100 USD savings. Go to www.vectorvest.ca/Toronto for more information or to register for the live, in-person workshop, or www.vectorvest.ca/Toronto2019 for the Live Video Stream.