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Thu. Apr. 10, 2008

Harvest the Fruit

The mango is native to Southern and Southeast Asia, but also grows in Central and South America, Africa, and the Arabian Peninsula. Mango trees will settle into a cropping pattern by the third year after planting and reach peak production in six to eight years. Seedling trees take a year longer to come into production. The tree is long-lived with some specimens known to be over 300 years old and still producing fruit.

Dividend investing is similar to planting a mango tree. Things start very slowly at first. It appears as if all your efforts are in vain, but ever so surely the process begins to produce fruit (dividends). In about 8-10 years most good dividend companies’ yield on cost (YOC) reaches a level that equals a money market account, and continues to grow from there.

Just as picking fruit from a mango tree does not harm it, living off dividends does not damage the investment’s ability to produce future results. A mango tree’s life will easily span an entire generation. Similarly, well-chosen dividend investments will not only provide income in retirement, but can be passed to your children who can continue to reap the benefits.

If you want to enjoy tomorrows dividend fruits, you will need to plant and nurture the tree today.

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