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$60.80
23.21
Thanks to those dividends, that same $2,000 is now worth $2,320.90 -- in spite of the fact that the index wound up exactly where it started.
Now's a great time to start
The combination of dollar-cost averaging and dividend reinvestment will earn you a better return in the real world than simply buying and holding -- and that's especially true in a market as volatile as this one.
Thanks to the recent market meltdown, many stocks are trading substantially below their 52-week highs -- meaning you can snap up more shares for the same investment.
Company
Recent Price
52-Week High
Industry
Goodyear (NYSE: GT)
$16.98
$36.67
Rubber & Plastics
Terex (NYSE: TEX)
$43.59
$96.94
Farm & Construction Machinery
Allstate (NYSE: ALL)
$44.15
$61.22
Property & Casualty Insurance
Valero (NYSE: VLO)
$32.63
$78.09
Oil & Gas Refining & Marketing
Wyndham Worldwide (NYSE: WYN)
$15.75
$38.73
Lodging
WellPoint (NYSE: WLP)
$44.87
$90.00
Health-Care Plans
Macy's (NYSE: M)
$15.58
$45.50
Department Stores
Data from Yahoo! Finance.
If you're not already dollar-cost averaging and reinvesting your dividends, this is the time to start.
Foolish final thoughts
The market may have been flat over the past 10 years, but the difference between a 0.63% rate of return and a 2.29% rate of return is significant -- especially in your retirement portfolio, where it will compound with all of the rates of return to come.
At Motley Fool Rule Your Retirement, we urge subscribers to make full use of the power of dollar-cost averaging and dividend reinvestment. In times like these, they are key strategies for securing a better long-term future. |