Stock Investing

I've spent most of this evening learning about stock investing, and my approach is to look at historical information for various stocks and applying that information to various investment scenarios. Let's start here: suppose I end up with $10,000 for which I have no need for except to keep it safe. Now, I'm also worried about inflation and so I want to invest to get returns to at least match inflation. Bank accounts and CD's aren't going to do that. At this time, a five year CD will pay about 2.25% compounded monthly. (That's an effective rate of 2.27%.) This CD far surpasses what a savings account will earn.

So, let's look at the stock scenario. Consider AT&T. Over the past 5 years the price of this stock has been somewhat steady, and the dividend rate has been nearly constant at $0.398 per share. Dividends are paid 4 times per year. If I had put my money there one year ago, what would my annual return have been through dividends alone that are not reinvested? Using $10,000 to buy AT&T stock on 1/3/2011 would have bought me about 377 shares. Four dividends were paid this year each at a rate of $0.398 per share. That's a total income of about $600, which is about 6% of my investment. Not bad. The next consideration is broker fees and taxes.

Now, I already have mutual funds. Let me consider the same scenario for my Capital Income Builder fund. On 1/3/2011 $10,000 would have gotten me about 201 shares at $49.53 per share. Four dividends will be paid at around $0.46 per share. That would have lead to about $375 in dividends for the year, or 3.75% of the investment. The difference seems to be that the share price was so high at the time of buying into the fund in this scenario.

I ran the same scenario for General Electric for 2011 with cam out to 5.8% return. I wonder if I am correct...