Dividend Millionaire – Grace Groner

This article discusses the Grace Groner story, another secret dividend millionaire. She was a secretary at Abbot Laboratories (ABT) for 43 years. She died in the year 2010 at the age of 100 with a fortune of $7.2 million. Grace Groner bequeathed her fortune to a foundation she had previously established to benefit students at her alma mater, Lake Forest College in Illinois.

Grace Groner was not an investor in the conventional sense. She did not own a diversified portfolio of income-producing stocks. Instead, she owned stock in only one company, Abbott Laboratories (ABT). She bought three shares at $60 each in 1935 and never sold them. She also lived frugally and had few expenses. Hence, she never needed the passive income from her lone stock holding. This fact, combined with her longevity, allowed the $180 she invested to compound through reinvested dividends and stock splits. Eventually, she became a secret dividend millionaire.

Grace Groner’s Biography

Grace Groner was born in 1909 with a twin sister, Gladys. She lived her early years on a small farm in Lake County, Illinois. She and her sister were orphaned at the age of twelve and were taken in by friends of her parents, the Anderson Family.

Grace was sent to boarding school and eventually Lake Forest College, from which she graduated in 1931. She began her job as a secretary at Abbott Laboratories and remained there for about 43 years, retiring in 1974.

Lake Forest College benefitted from their association with Grace Groner. She donated $180,000 toward a scholarship fund. After her death, she donated her entire wealth to a foundation created to benefit Lake Forest College students.

She never married, and Grace Groner died on January 19, 2010, at the age of 100.

Grace Groner’s Stock Holdings

Grace Groner owned only one stock, unlike most other secret dividend millionaires. She purchased three shares of Abbott stock for $60 per share, totaling $180 in 1935. After decades of reinvesting dividends and several stock splits, the number of shares grew to a few hundred thousand shares shares worth ~$7.2 million. Seemingly, she never bought another share of Abbott or another stock.

In 2010, Abbott paid an annual dividend of $1.72 per share. Grace’s three shares generated a passive income stream of at least $172,000. Grace could have easily lived off her dividends, especially considering her frugal lifestyle.

However, if we dig a little deeper, we realize Grace’s passive income stream was even higher. On January 19, 2010, Abbott’s stock price closed at $26.89, indicating her $7.2 million portfolio contained ~267,757 shares. Her dividend income would have been roughly $460,542 annually!

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How Grace Groner Became a Dividend Millionaire

Frugal

She was frugal but not exceedingly cheap. She stayed in an apartment owned by the Andersons and eventually a tiny one-bedroom cottage she inherited for her entire adult life. As a result, she did not have to pay rent or a mortgage, which was a significant advantage in saving on expenses. While many homeowners struggle between paying off their mortgage or investing, Grace Groner did not need to make that choice.

As an example of her frugality, she owned a car. But after it was stolen, she did not buy a new one; instead, she walked.

However, at the same time, she was not a miser. Grace traveled extensively after retirement and donated money to charities, often anonymously.

Frugality let Grace Groner live a simple life, not requiring her to draw upon her investment. But unfortunately, she never invested more money in Abbott despite her frugality. If she had, her wealth would have been much greater.

Luck

Luck played a significant part in Grace’s success in achieving dividend millionaire status. She worked at Abbott Laboratories with little knowledge that it would become one of the most successful companies at creating wealth for its shareholders.

Abbott Laboratories started to pay a dividend in 1924. After that, the company began increasing its dividend, eventually becoming a Dividend Aristocrat. The streak is now 50 years, making it a Dividend King. In addition, the stock has split nine times back to 1964, allowing her initial three shares to become 2,304 not counting reinvested dividends.

Grace Groner was not an investing genius or seemingly showed interest in the stock market. She was lucky to have bought three shares in an excellent company and held on to it for a really long time. On the negative side, she did not own a diversified portfolio, something dividend growth investors discourage today.

Buy and Hold Investor

She was a buy-and-hold investor, much like other secret dividend millionaires. To quote Warren Buffett,

“Time is the friend of a wonderful company, the enemy of the mediocre.”

“An investor should act as though he had a lifetime decision card with just twenty punches on it.”

Whether knowingly or not, Grace Groner followed the above two Buffett quotes. She bought stock in a wonderful company and held on. Moreover, she did not act like she had 20 punches but just one.

Furthermore, she followed a dividend growth investing strategy whether she knew it or not. The dividends were reinvested, leveraging the power of compounding.

Started Early and Lived Long

Grace Groner lived an extremely long life reaching the age of 100 years. She only worked until age 65, but because she reinvested her dividends, her wealth grew by compounding. Her initial investment grew through about 13 recessions, World War II, and other adverse events. If she had invested the initial $180 in a savings account with a 3% interest rate, it would have only turned into about $1,652 when she died.

It was unlikely that Grace was a millionaire when she retired. However, Abbott’s growth rate accelerated in the 1980s as it became a preeminent medical device and pharma company. In addition, because she probably lived off her pension and Social Security after retirement, her total wealth benefitted significantly by leveraging the power of compounding.

Final Thoughts on Dividend Millionaire – Grace Groner

The Grace Groner story and how she became a dividend millionaire are interesting. But she was not a dividend growth investor in the way we view it today. In fact, she bought only one stock and was lucky it was a company that successfully compounded wealth for its shareholders. The attributes that helped her success were frugality, luck, buy and hold, and long life.

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