Another Dividend Reinvestment Millionaire – Sylvia Bloom
I have written about 10 dividend millionaires in my Dividend Power Week in Review. You can take a look at my article Secret Dividend Millionaires that discusses all ten in detail. I also outline the Three Principles of the Secret Dividend Millionaires in the article. Today I talk about another dividend reinvestment millionaire, Sylvia Bloom.
Who is Sylvia Bloom?
Sylvia Bloom died at the age of 96 in 2016. When she died, she had a fortune of more than $9 million, and was another dividend reinvestment millionaire. She never had a high paying job. She was legal secretary who worked at the same law firm, which is now Gottlieb, Steen, & Hamilton in New York City for 67 years. Since she never had children of her own, she left the bulk of her fortune to charity. Henry Street Settlement, a social services group, received $6.24 million. Another $1 million went to Hunter College, and another $1 million went to a scholarship fund. The rest of her wealth was divided amongst friends and family.
Reportedly, Sylvia Bloom lived a modest and frugal life in a rent-controlled apartment in Brooklyn. She packed her own lunch. Reportedly, she was not showy, did not call attention to herself, and did not talk about money. She was married to, Raymond Margolies, a fire fighter, who died in 2002. She took the subway to work on most days. She earned her college degree from Hunter College attending night classes while working.
She joined the relatively new (at the time) law firm, Cleary Gottlieb as a secretary in 1947. So, her salary was probably fairly modest for much of her life. However, she turned her salary into a fortune of over $9 million. Her strategy was fairly simple. She built her wealth by paying attention to the investments of the attorneys in her office, who were often asking her to relay their investment choices in the stock market to their brokers. Sylvia Bloom’s niece indicated that “…when the boss would buy a stock, she would make the purchase for him and then buy the same stock for herself, but in a smaller amount because she was on a reporter’s salary.”
How Did Sylvia Bloom Become a Dividend Millionaire?
Sylvia Bloom was obviously a shrewd investor. When she died her wealth was split between 11 banks and three brokerage houses. She was not formally trained in investing. She learned about it on her own like many of us. It is not entirely clear which stocks Sylvia Bloom owned, but reportedly ExxonMobil (XOM) and Colgate-Palmolive (CL) were amongst them. These companies have grown wealth for many decades.
Using a dividend reinvestment calculator and assuming that Sylvia Bloom had invested $1,000 in ExxonMobil in 1970 it would have grown to about $2.9 million with an annualized return of 18.7% in mid-2016. An investment in Colgate-Palmolive would have grown to over $6.3 million with an annualized return in the same time period.
Final Thoughts on Another Dividend Millionaire – Sylvia Bloom
The combination of a frugal lifestyle, saving her money, and her longevity allowed her to become another dividend reinvestment millionaire. She was a child of Great Depression and knew what it was like to not have too much money and she lived below her means allowing her to save money. Her longevity would permit her investments to leverage the power of compounding. We all know how important that is for building wealth through dividend stocks.
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Dividend Increases and Reinstatements
McCormick & Company (MKC) announced a 2-for-1 split for shareholders of record on November 20th. The spice and seasoning giant is a long-time dividend growth stock having raised the dividend for 33 consecutive years. The stock is on the Dividend Aristocrats and Dividend Champions lists.
Starbucks (SBUX) raised the dividend 9.8% to $0.45 per share from $0.41 per share. This is the 11th consecutive increase making the stock a Dividend Contender.
Bank OZK (OZK) hiked the dividend 0.9% to $0.275 per share from $0.273 per share. This is the 24th consecutive increase. The stock is a Dividend Contender.
Conagra Foods (CAG) raised the dividend a whopping 29.4% to $0.275 per share from $0.212 per share. The dividend had been flat since 2017.
Lennar Corporation (LEN) raised the dividend an impressive 100% to $0.25 per share from $0.125 per share. This is the second increase this year. Note that the dividend was $0.04 per share in 2019.
Coronavirus Dividend Cuts and Suspensions List
I updated my coronavirus dividend cuts and suspensions list this past Wednesday. The number of companies on the list has risen to 412. We are well over 10% of companies that pay dividends having cut or suspended them since the start of the COVID-19 pandemic. The number of companies on the list continues to rise each week.
No companies were added to the list in the past week.
I included 8 companies that I had previously missed. The 8 companies that I previously missed were Moog (MOG.A), HDFC Bank Limited (HDFC), Orange S.A. (ORAN), Dick’s Sporting Goods (DKS), Harvest Capital Credit Corporation (HCAP), Royal Caribbean Group (RCL), SM Energy Company (SM), and Diversified Royalty (BEVFF).
I added a detailed discussion of Darden Restaurants (DRI) dividend suspension and reinstatement. The new dividend is at a lower level than before the pandemic started so the dividend was effectively cut. I add a new article on a dividend suspension or cut every week.
Market Valuation – Another Dividend Reinvestment Millionaire
The S&P 500 is trading at a price-to-earnings ratio of 28.8X and the Schiller P/E Ratio is at about 30.8X. These went up a tad since last week. This is the first increase after four consecutive weeks of declines in these valuation metrics. Note that the long-term mean of these two ratios are 15.8X and 16.7X, respectively. I continue to believe that the market is largely overvalued at this point
Overall, I believe that we will continue to face market weakness due to the uncertainties related the upcoming election. The main news this past week has been that the President, many in the White House, press pool, and many in the campaign have been infected by COVID-19. The markets responded with a decline. I am not certain if this news will have much impact on the market though over long-term.
However, the news has seemingly changed the dynamics for the stimulus bill, which would have a large positive impact on the economy. The administration is moving closer to the House position, which passed a $2.2 trillion bill. It remains to be seen what the Senate will do.
S&P 500 PE Ratio
Shiller PE Ratio
Stock Market Volatility – CBOE VIX
The CBOE VIX measuring volatility was up about a point this past week to approximately 27.6. This is the second week in a row that it has trended up. The VIX still remains elevated relative to the long-term average. The long-term average is approximately 19 to 20. I continue to believe that volatility is being driven by new infections, vaccine developments, federal stimulus, and unemployment numbers over the long-term. Over the near-term I think that election news and uncertainty will drive volatility.
Fear & Greed Index – Another Dividend Reinvestment Millionaire
I also track the Fear & Greed Index. There are seven indicators in the index. They are Put and Call Options, Junk Bond Demand, Market Momentum, Market Volatility, Stock Price Strength, Stock Price Breadth, and Safe Haven Demand.
The current reading is now at 40, which is in Fear. The index ticked down 9 points from last week. One month ago, the index was in Extreme Greed at a reading of 77.
More of the sub-indices are signaling a Neutral or worse readings. Only two sub-indices: Junk Bond Demand and Market Momentum are signaling Greed. Market Volatility is still Neutral. The remaining four sub-indices are signaling Fear or Extreme Fear. Put and Call Options show that the volume in put options is the highest in 2-years. Stock Price Strength remains weak as the number of stocks hitting 52-week highs is declining. There are almost as many advancing stocks as declining stocks this past week. Stock price breadth is also weak as the ratio of advancing to declining stocks is coming down. Investors continue to go for bonds, which are outperforming stocks by 3.54% in the past 20 days. This index is signaling Extreme Fear.
The number of weekly new unemployment claims were down with last week at 837,000. This is down 36,000 from last week. We seem to be bouncing around between 800,000 and 1 million for now. But for some perspective, one-year ago weekly unemployment claims were only about 218,000. Currently we are 4X the normal level. The seasonally adjusted insured unemployment rate was 8.1%. The weekly revised rate is now 8.6% to 8.7%
The ten states with the highest unemployment rates were Hawaii (21.3), California (16.1), Nevada (14.7), New York (13.7), Puerto Rico (12.8), Louisiana (12.6), Georgia (12.2), the Virgin Islands (11.9), District of Columbia (11.2), and Connecticut (10.6) .
Consumer confidence rose to its highest level since the start of the COVID-19 pandemic. The index increased from 86.3 in August to 101.8 in September. The index had dropped from a high of 132.6 in February to as low as 85.7 in April. The 101.8 value shows increased optimism due likely to an improving economy, offset by still high infections and deaths, and gridlock in Washington DC.
The U.S Pending Home Sales Index increased 8.8% to a record high of 132.8. The record high piggybacks on top of 3 consecutive months of positive contract activity. All four regions of the U.S. (Northeast, Midwest, South, and West) saw increases. On a year-over-year basis pending sales increased 24.2%, due to historically low interests. Home prices are up as well as the median price for an existing single-family home increased 11.7% to $315,000 in comparable periods.
Consumer spending increased in August for the fourth consecutive month. However, the 1% increase is the smallest since the 12.7% drop in April. The expiration of $600 in weekly federal jobless benefits likely negatively affected consumer spending. Income dropped 2.7%. Inflation rose only 0.3% in August, and is 1.4% in the trailing 12 months, below the U.S. Federal Reserve’s target of 2%.
Thanks for reading Sylvia Bloom – Dividend Reinvestment Millionaire – Week in Review!
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.