This Sweet Old Lady Has a $7 Million Secret

Listen to this post

Look at this photo of a sweet old lady…

She looks like the kind of lady who has a bowl full of those strawberry candies waiting for you in her parlor.

But you’d never guess this sweet old lady made $7 million in the stock market by making just one smart move early in her life…

Ah, but now you can see it. All in that sly, knowing smile…

This woman’s name is Grace Groner. Her story has been told countless times by financial writers just like me to demonstrate the power of investing in high-quality, capital-efficient, dividend-paying stocks and reinvesting those dividends over the long haul.

I’m going to tell you her story today, shining a light on this most powerful of the simple, stress-free investment strategies.

Grace proved that this strategy works during up markets and down markets. Periods of war and peace. Major societal change, natural disasters, and everything in between. And it works just as well today as it did 89 years ago.

Let me show you why…

How Grace Groner Made $7 Million Doing (Almost) Nothing

When Grace was 26 years old in 1935, she purchased three shares of $60 each in the company she worked at, Abbott Laboratories (ABT).

She then did… nothing. She didn’t invest another penny or, as far as anyone knows, trade any other stocks.

But she didn’t need to. Because during the time she worked at Abbott – for 43 years until she retired – her three shares had split into several dozen that were worth much, much more than she paid for them.

She held firm. The shares kept splitting… eventually growing into 1,152 shares after ABT’s final stock split in 1998.

That alone would be an impressive trade. But it’s not enough to make $7 million. So she must have done something else, right?

Well, it was more about what Grace didn’t do.

You see, every dividend that Abbott Laboratories issued, Grace plugged right back into her position. She never took the cash.

This simple decision resulted in those 1,152 shares she purchased ballooning into over 100,000 shares worth over $7 million by the time she passed away in 2010.

And all $7 million of Grace’s fortune went to students of the local college in Lake Forest, Illinois.

Grace was a class act in more ways than one. And she shows the power of investing in quality dividend-paying companies for the long haul, never straying from the path.

Just how powerful is this technique? Let’s look at the data…

A Dividend Time Machine

Let’s say you’re 25 years old. You’re smarter than most other 25-year-olds and want to start a position in a quality dividend payer and promise yourself you’ll never sell until you retire at 67.

We’ll use Walmart (WMT) as an example, as it’s a dividend aristocrat with a strong history of consistent dividend payments.

Walmart is trading at just over $65 as I write on Tuesday afternoon. You’re 25, so you don’t have a ton of cash and only buy 10 shares. That’s an initial investment of $650. That’s also all the WMT stock you’re ever going to buy. And the current annual dividend yield is 1.27%.

For the sake of example, let’s make a few assumptions:

• Walmart has raised its quarterly dividend by one cent every year for the last 10 years (over 3%), so we can conservatively assume a 1.5% increase in dividend every year over the next 42 years.
• We’ll also assume you get taxed at a rate of 15% on those dividends – thanks, Uncle Sam!
• WMT has also gained about 11% each year over the past 10 years, so we’ll assume it keeps rising at that rate, as well.
• And for simplicity’s sake, WMT will not conduct any stock splits.

Okay, you’re set up. Let’s jump into a time machine and meet you in 42 years…

Hello! You’re 67 and it’s time to retire. Hope it’s been a great life. Time to check in on Walmart…

Hey, your 10 WMT shares are worth just over $5,200 each! That’s a 7,909% return doing… nothing at all.

Even better, your dividends earn you about $932 in income every single year.

That’s not bad. It’s not life-changing, but it’s not bad…

Wait a minute, did you forget something? Ah, right, you did. Good thing we have a time machine.

Let’s go back in time and make sure you wisely choose to reinvest your dividends in WMT back when you’re 25. What happens then?

Your investment almost doubles to over $92,000… and so does your dividend income, at nearly $1,660 per year.

That works out to a 14,081% gain on your $650 investment.

This is the power of Grace Groner’s one-move technique. Buy great dividend stocks… hold them forever… and keep reinvesting those dividends. By the time you’re retired, you can stop the dividend reinvestments and have a payout that moves the needle on your yearly income.

Do this with a few other high-quality stocks and down the road, you’ll have a dividend portfolio that might even rival your Social Security check. (Or, if you’re fortunate or frugal enough, you can be like Grace and let the dividend compounding go vertical to build a huge legacy for your loved ones.)

And if you think this advice only applies to 25-year-olds, it absolutely doesn’t.

It’s never too late to start buying up shares of quality dividend-paying companies and making those positions as big as your risk tolerance allows. It’s a great way to supplement a fixed income in retirement.

And of course, we’ll keep sniffing out and sharing these ideas with you right here in TradeSmith Daily.

To your health and wealth,

Michael Salvatore
Editor, TradeSmith

P.S. If you have a large portfolio, you could potentially add six figures in six to 12 months without touching stocks, bonds, dividends, etc.

Warren Buffett and other investing legends might have made their name as great stock-pickers – but they’ll certainly use this technique when they see the opportunity. Yet most people, even the wealthy, have never tried it, much less tried it properly.

We’ll make it as easy as possible to get started, beginning with tonight’s event: The One Percent Event.

The tools we recommend for this, Options360, have a 95% track record of success with this strategy, and readers have reported making anything from a few thousand a month to over $1 million in about five months.

Click here to automatically reserve your spot in the event tonight, May 29, at 8 p.m. Eastern. The coming six months could deliver some of the biggest payouts yet (because of outsized volatility from the election), so be sure to hear us out and get involved.