The AMM Dividend Strategy launched 10 years ago in September 2011. Then in October 2013 we sent the very first AMM Dividend Letter. 8 years later you’re now reading our 50th issue!
If you exclude our portfolio update emails, we averaged 6 issues per year. An unparalleled example of literary output. Please don’t Google Ryoki Inoue.
When you reach a milestone, the custom is to synthesize your journey and the lessons learned into some grand unified theory of investing. We’re not Cheryl Strayed and writing about positions in our portfolio is not an epic personal journey. But we do have one grand insight. It’s completely unoriginal and we didn’t have to embark on a journey of investment discovery to find it. Buy high quality companies at a decent price and then give them time. Let the companies do the heavy lifting of compounding your returns for you. And do your best to get out of your own way.
The oldest position in the Portfolio is Microsoft. We first bought Microsoft on September 9, 2011. It was trading around $25 per share and yielding about 2.48%. Its quarterly dividend was $0.20 per share back then. Microsoft’s current price is around $325, its yield is about 0.75%, and its quarterly dividend is now $0.56 per share. Our yield on cost on our original purchase is 8.96%.
Ignoring the price return, Microsoft’s dividend grew at a 10.84% compound annual growth rate over this period. If Microsoft continues to grow its dividend at that rate over the next 10 years, then our yield on cost would be 25%. Every year you would earn a 25% return on your original investment just from the dividend.
This is the kind of outcome we’re looking for in each of your positions. Some will make it, some won’t. But none will get there if we don’t give them time to compound.