Yield on Cost

I'm simply amazed at the number of people who just don't understand the concept of yield on cost. Whenever I point them to a dividend-paying stock, they look back at me and say something like, "Dude, it only has a 4% yield ... I can get that from a money market account."

Well, yeah, you can. But that money market ain't gonna be increasing its payments very much. Meanwhile, there are plenty of stocks that raise their dividends every single freakin' year!

In other words, if you come back a few years later, your cost basis hasn't changed, but your annual dividend is likely to be a lot higher. A simple division problem later, and you'll realize that you're now getting something like 15% a year on that original investment.

Can your money market do that? Didn't think so!