Anne Scheiber: An amazing, but slightly tragic, Dividend Tycoon

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Readers who have read many personal finance and investing articles may well have come across the story of Anne Scheiber before, but I think it is worth having a look at her life in the context of being an inspiration to anybody wanting to become a Dividend Tycoon, yet taking into account the lessons from her story on why balance in life is also important.

A brief overview on the life of Anne Scheiber

She lived in New York, and when she was in her thirties, at the time of the great depression, she lost all her money she had entrusted her brother to invest for her. She managed to save $5000 from her modest paying IRS auditing job, and started on her own investing path in her forties with this and her $3150 annual pension. She also lived till 1995 – to the age of 101.

The amazing part

On her death it was established that her investments were worth $22 million!  This was established as she left the money to Yeshiva university to help women in need, even though she did not herself attend the university.

To turn $5000 into $22 million is obviously no easy feat, so she must have done many things well. Looking at what has been written, I would say the most important would be:

  • Not selling her dividend paying stocks or trying to time the market. She did not sell out during the numerous crashes she would have experienced during her lifetime. This is not easy when the world is crashing around you, but history has confirmed that the dividend aristocrats such as Coca-Cola are not badly affected on an operational level, and continue to pump out both profits and dividends, so why sell when the stock price tanks? You would not sell your profitable McDonald’s franchise because the share market falls 30%.
  • High savings rate. Unfortunately it takes money to make money. For the ordinary person the only source of capital is normally saving part of your income. In Anne Scheiber’s case her saving rate was around 80%. This is incredibly high and by all accounts she was extremely frugal and spent very little on herself. She is obviously an extreme case, but it does show what is possible.
  • She attended shareholder meetings which were based in New York. Now apparently this was partly to obtain free food and refreshments.. well she did turn $5000 into $22m, and as per my previous point you have to think she did some unconventional things! But I think she was also genuinely there to monitor her investments. Attending AGM’s has helped me gain a better feeling for companies I have invested in, sometimes you need to see the body language of directors, and reading only gets you so far. I would put attending AGM’s in the same camp as visiting your dividend machines, see my earlier post on this subject: http://www.dividendtycoon.com/blog/2016/04/22/visiting-your-dividend-machines/
  • She invested in top quality brands, such as Coca-Cola, Pepsi and Schering -Plough (the pharmaceutical company). Therefore the companies themselves compounded earnings, paid out generous dividends, which she reinvested. In later years she also invested in tax free municipal bonds.
  • So what did being a Dividend Tycoon do for her finances on a cash flow basis? At her death, her dividend and interest income was $750000 per year. Think about that $62500 coming to you every month, whether you get out of bed or not in the morning. No wonder she lived till 101! And she started with only $5000! This just shows the power of compounding. Even if you are not as dedicated as Anne Scheiber, you can get a pretty good result if you allow compounding to take its course. It is not get rich quick, but it is likely you will do well if you do the right things.

The slightly tragic part

Well I said that with $62500 (in 1995) coming through the door every month, she was likely to be happy, which would have contributed to her long life. From what I have read though she does not appear to have had much of a life, although I do not feel one can judge whether she was happy or not. She was a recluse who had no friends and had shunned family, her only real contact being those people who in some way administered her wealth such as stockbrokers. This strikes me as rather tragic, and a waste, surely she should have at least had some pleasure from her wealth such as travel and sharing meals with friends?

My conclusion

I admire the fact that she gave her fortune to a good cause, and in general one would have to say that she gave more to the world than she took out. Besides money, she also left great lessons. Any aspiring Dividend Tycoon can get inspiration from how she compounded her wealth. But she also left the lesson that balance is important and that it is okay to use some of the money for things that are meaningful to you, especially once you are already wealthy and not still in the building phase.

In conclusion, I would have loved to have been able to sit down and have a cup of tea with Anne Scheiber, to discuss her investments, her strategy and her outlook on life. I think it would have been fascinating, even if I would most likely have had to take along my own tea bag..

 

 

2 thoughts on “Anne Scheiber: An amazing, but slightly tragic, Dividend Tycoon”

  1. If nothing else, this story shows the very real effects of investing for the long term and not panicking with every market drop. Think about it, she has been invested during many great world catastrophes including major wars, numerous recessions, Cold War scares, and more. By holding on to quality stocks, not selling, contributing and reinvesting along with dividend raises all helped create an amazing dividend machine. As you said, who are we to judge how she lived. It wouldn’t be my lifestyle choice but for her it was fine. She lived a lot longer than most.

    1. Thanks for the great comment DivHut. It is truly amazing what can be achieved if one keeps plugging away consistently and does not panic when everyone else is. A long life does help the compounding, I agree with you that her lifestyle choices worked for her which is the most important thing, and I do think that those huge dividends helped bring a smile to her face, and contributed to her longevity.

      Regards,
      Ross

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