How Buying Beef Jerky Reminded Me of the Power of Dividends

I can buy a share of Coca-Cola for that,” I jokingly said to the store manager after asking him where the beef jerky was. I had seen the brand I wanted up front, but it was a larger size and priced at $30. The conversation went like this:

“Are you sure you don’t want that one? It’s only $30,” he joked.

I chuckled along as I followed him as he took me to the aisle where smaller packages of beef jerky awaited. “I could buy a share of Coca-Cola for that,” I responded, and we both let out a chuckle.

I meant what I said, even though it wasn’t entirely accurate because Coca-Cola is actually double that right now. But at one point during the pandemic when stocks were crashing, Coca-Cola briefly touched down in the high 30s before being scooped up by long-term investors.

Still, I want you to understand something, and that’s why I’m writing this: earned income from wages and salaries is not the only income you can get your hands on. Later, when I arrived back at my apartment, it hit me that what I really meant to say was, “I could buy a dollar of income for that.”

Because essentially, that’s what you’re doing when you’re buying shares of a good quality company. One that pays a stable consistent dividend. You are buying a certain percentage of income allowing your money to work for you.

This is something that I often forget to remember as well because I’m not always focused on the dividends as much as the main accumulation of the principal.

But it’s important to keep this in perspective: when you buy a certain ETF or a share of a company, there’s a good chance that a dividend is going to be paid out, especially for mature companies or stable ETFs that have been around for a long time.

When you look at it like that, it’s a great way to remind yourself, “Do I really want to spend 30 bucks on this unnecessary item when I can buy a share of a quality company or ETF and have it pay me a nice income over time?”

Let’s be honest, it’s going to be small at first. You won’t have an income you can live off immediately. It’s not going to be something sustainable right away. But over time, these dividends accumulate, and the more you allow them to reinvest, the bigger your capital grows and the more income that comes into your household.

In the beginning of my investment journey, I did look at dividends and saw that each cent added up to an opportunity for my future where I wouldn’t have to rely on a single source of income.

Right now, as I build my investment fund, I’m not too worried about the accumulation of dividends – meaning I am not solely focused on the yield . However, it is something I do want to keep in mind.

As my principal grows, it’s important to remember that these shares are throwing off dividends. Each time I invest, I’m not only investing for growth but also for an additional income source if I ever decide that it’s something I want to live off of down the road in the distant future.

Update: 8/2/2024: My household hit a new milestone. Shares of Coca-Cola, ticker symbol KO, have accumulated enough in my personal investment portfolio to now purchase additional shares of Coca Cola stock through dividends.