My Dividend Employee Steve

Hey guys, meet Steve, my dividend employee. 

Picture of my dividend employee Steve

Steve’s a cool guy and a real go getter.

I first met Steve when I bought my first stock in college. The stock itself is irrelevant but it was the start of something special. I didn’t know it at the time but when I made that first purchase, I apparently hired Steve. I didn’t plan on it but it just happened.

Three months later, he showed up at my house to say hello.

“Hey friend,” he said, “here’s 73 cents.”

“Oh,” I said, “that’s cool, but why are you giving this to me; and what am I going to do with 73 cents?”

“It’s your 73 cents,” he said, “remember that stock you bought a while back? It comes with an added benefit, a great employee like me.” 

I was thinking about whether I could fire Steve and get a pack of gum with my newfound wealth when I saw that Steve was beckoning me over while looking around to make sure no one can hear.

“I got a secret for you buddy, I’m in what you call the investment game. Don’t tell anyone though since I don’t want to be run ragged.”

“Oh?”

“Yes,” he continued, “give me back that 73 cents and I’ll make it worth your while.”

I thought about it for a minute and I decided that I didn’t really want that gum anyway.

I had invested with a long term perspective in mind. Steve seemed like a reputable guy and if he wanted to help out then I was more than willing to take the aid.

He left and I didn’t hear from him for a while.

I asked other people who were well versed with finance what they thought about Steve. They said that he’s not a big deal right now but he’s got a lot of potential if you let him do his job.

I liked the sound of that so why not give him a chance?

Three months later, he showed up again bearing gifts. This time it was a dollar. It was more than before! At this point, I had bought some additional shares and the extra cash, however small it may have been helped grow that dividend. 

The visits continued and Steve kept showing up every few months giving me more and more money each quarter. I didn’t need the money so I just let him keep it, let him reinvest it for me and each visit meant more and more cash.

I added a few bonds to my holdings and suddenly Steve was visiting me monthly telling me about my small payments in those months.

This was right before 2008 so things started looking bleak for a while. Prices were down and the value of some of my stocks was lower than when I initially bought them. 

However, Steve kept visiting even as stock prices were tanking. I wasn’t worried as I had a small amount invested and saw it as an opportunity to buy. Plus, Steve kept coming back which was a good sign as well.

“Don’t worry about the prices,” he said, “this is the best time to buy so I’ll just take this $18 and keep buying more stocks for you.”

It wasn’t a lot but each time Steve came back, I was glad to see the additional dollars flowing into my account and buying up more shares. The best part about it was that each time he came, the amount of money he brought was a tiny bit higher.

I didn’t have to do any work either! Steve did everything automatically and the years passed and the stock market began growing again.

It might have been just 73 cents at first but then it became $100 every quarter and that total got bigger each time he visited.

“Thanks Steve,” I said whenever he came around. By now, he was actually getting me full shares of ETFs or stocks instead of tiny fractions. 

“No problem, boss!”

He gave me a thumbs up and kept doing his thing. The dividends kept coming and Steve did it all himself without much interference from me. 

dividend employee

That’s Steve in a nutshell. He’s a cool guy, he does work for me and never asks for anything back.

That’s the type of employee you want. The best thing is that we all have a Steve(or Ruth or whatever you want to name him/her) as long as we’re investing in the market.

People have asked me about Steve in my monthly dividend posts. I figured it was time to give him an introduction because of all the things he does for me. I also figured it’d be good to give him an update for 2019. 

Having an employee like Steve is one of the keys to early retirement and financial independence. He is the definition of making your money work for you.

The reason investing works is because of compound growth. Total returns are part growth and part dividends and re-investing those dividends means you continue to grow your share counts. That allows an investor collect more and more dividends and grow returns with each passing year.

Steve is the embodiment of the earning potential of my portfolio. He acts as a fun little way to track my progress towards financial independence. However, it’s important to remember that dividends are not everything and total return matters. Still, Steve is a great indicator of my progress and a window into how close I am to covering my living expenses with Steve’s payments alone. 

I don’t think investing has to be super serious. Steve is a cute little way to illustrative the potential a portfolio has in eventually replacing a job. That’s the end goal here after all and a lot of us are trying to do with our investments.

I use Steve as a way to translate my dividend income into an hourly wage. It’s as if my portfolio were an employee generating revenue for me.

For the purposes of my hourly wage calculations, Steve works 250 business days and 8 hour days. He delivers income each month based on my holdings. He reinvests everything for me because I’m in the growth stage right now, not in the withdrawal stage.

The income may be barely noticeable at first. However, the growth is substantial and speaks to the power of continue investing and reinvesting.

I only started tracking my dividends in 2016 but the growth has already been substantial as evidenced by the totals below.

In 2016, Steve brought me $7,023.82 in dividends. That grew by 18.4% in 2017 with a total of $8,317.30! By 2018, Steve’s deliveries had grown another 28.6% and eclipsed 10k with a total of $10,702.03. The best part about Steve’s work is that it keeps getting better. 2019 is set to be another record year with my growth year to date eclipsing what I saw in 2018!

It’s awesome to see Steve’s growth!

The goal here is to help Steve grow his income and have him help me smooth out any rough periods by providing income that can be reinvested through good times and bad. The ideal scenario would be a time where Steve covers all my costs. It’d be nice to never have to touch the principal but I’m a long ways away from that.

The $10,700 in annual income in 2018 was reinvested into my portfolio generating at least $180 in forward income for me, that’s part of why compound interest is so awesome – reinvested growth!

Combine that with additional contributions in 2019 and dividend increases by companies I own and you can see why Steve is having a better year in 2019 and will have an even better year in 2020!

Right now, my goal is to help Steve grow that hourly wage as much as possible because the more he prospers, the more I proposer and that’s good new for me! His hourly wage is growing and while it’s still below the federal minimum wage, it’s catching up fast and the trend is positive as evidenced below.

I love Steve’s visits even more these days now that those numbers have grown well past that initial 73 cents but even that 73 cents was important because it planted a seed that has continued to grow and will continue to grow well into the future!

If you’re just starting out, this might help you see how much those initial dollars can mean. However, if you’re well on your way then you already know how important an employee like Steve can be for your future growth!

If interested, you can follow my dividend updates every month and see how Steve is doing.

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63 thoughts on “My Dividend Employee Steve

  1. Time, I’m tellin you, employee of the month recognition, more money and a promotion is deserved for Steve. I would even give Steve a reserved parking spot with his name on it. Otherwise someone is going to recruit that kind of talent away from you. And I’m sure you know how hard it is to find good help these days. Tom

    1. Haha, he’s already got a parking spot right outside my place and he’s won employee of the month every month since he’s been with me. Part of that might be him being my only employee but he doesn’t need to know that!

  2. This was a really awesome and easy to understand way of explaining dividend re-investing. And it’s true small gains in the beginning lead to bigger gains in the future! Love it!

  3. I’m not a dividend investor particularly but I have a bit of stock so I have my own Steve, but since my name is Steve I’ll just call him Mini Me. He’s up to nearly $10 per hour and bucking for another raise! Very clever way to teach people about compounding.

  4. Came here from reddit. Steve’s a great way to introduce the concept of dividends to non-financial-savvy people. Thanks for sharing!

  5. I love this analogy. It’s comical but it gets a great point across – dividends are always working for you in the background. I have a couple Steve’s working for me in my portfolio as well haha. Great article!

  6. One of the best arguments for dividends I’ve seen in awhile. I love receiving dividends and interest (even though I seem to get slammed when I blog about it). Having money work for you is awesome!

  7. Steve is a good guy and great employee. He has been working for me for a number of years. As time goes by, he becomes more and more productive. Everyone should hire Steve. He even works when you are off. I would gladly write him a letter of recommendation.

  8. Fantastic way to describe how building a portfolio of dividend stocks can be thought of as an employee out working hard for you each and every day!

    I am in the process of teaching my 14 year old about investing in dividend stocks. He has earned $5.93 this year in dividend income and I have told him that will grow to close to $10 next year if he keeps investing his birthday and allowance money.

    Thanks for sharing this!

  9. When starting out, won’t the commission erode the value of reinvesting the dividend? I love the concept but it seems inefficient.

    1. Doug, most brokerages and stocks/funds/ETFs have a DRIP(dividend reinvestment plan) which means the dividend is reinvested automatically into new shares without any commissions so you’re dollar cost averaging each time with no cost on your end.

  10. I call my employee Charles. My dad taught me about Charles when I was in my early teens and how if I can just let Charles do his thing i’ll be better off. I didn’t understand it then and at times I had actually forgotten about him. Lately I have been learning to appreciate more and more how hard Charles works and he has become my favorite employee and a dear friend. Great post.

  11. Steve is continuing to work his magic for you every single day. Must be nice to have a worker like that 🙂 Keep Steve happy though. Keep feeding him so he can work and bring you ever more dollars each month. Keep up the good work!

  12. I really enjoyed this post, Time! I love the concept. I thought I left a comment from my phone on this post, but I wasn’t able to find it, so I left another. Looking forward to seeing how much Steve brings in this year.

  13. Steve is such a great metaphor! Everyone needs a Steve in my life. I appreciate how you started out with 73 cents because I’m a young investor and I don’t have the capital to make big investments. IT COMPOUNDS!

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