How much would I make on an investment into a stock that pays monthly dividends over a year? and Investment Antiques

How much would I make on an investment into a stock that pays monthly dividends over a year?

Investment is 16,000
Price Per Share 7.00
Monthly stock dividend .10
Total shares to start 2285

I plan to take the stock dividend instead of cash payment. Assuming the price of the stock stays at or above the purchase price I calculate I will have just over 6000 shares and an approximate value on the investment of almost 48,000. Does this sound right?


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Answer by Jon
No.
So to start, you'd have 16000/7 = 2285 shares.
First month, you'd get ten cents for each share, which is $ 22.85. So you could buy 3 shares, and keep the extra $ 1.85. Now you have 2288 shares.
Second month, you'd get ten cents for each share, which is $ 22.88. Buy another 3 shares, keep the $ 1.88.
So you'd have about 2321 shares, or $ 16,247 at the end of the year, if the stock's value stayed flat. Of course it could go up or down. Ideally you'd want it to go down for a while (so your dividend will buy a greater # of shares each month) but then go up right when you're ready to sell it. But it's ridiculously unlikely that you'd triple your money.

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