I drove past the Tootsie Roll factory on Cicero Avenue in Chicago the other day by Midway Airport, and it reminded me of possibly the strangest thing I know of in dividend investing.

Every March, Tootsie Roll (TR) hands every single shareholder 3% more shares. Own 100, you wake up with 103. They've been doing it for decades.

They call it a stock dividend. Your broker will show it as a 103-for-100 split. And that's exactly how it behaves.

The day before: 100 shares at $38.89 is $3,889. The day after: 103 shares at $37.76 is $3,889.

More shares. Lower price. Same money.

I heard about this years ago on a podcast: 3% in free shares, plus about 1% in cash, equals a 4% yield. Just sell the bonus shares every March.

It sounds logical, but it's a bit misleading...

Think about your savings account. The bank pays you interest because it did something useful with your money. That's income. If you walk in and withdraw $100, your balance drops $100. Nobody would call that interest.

Selling those three bonus shares is really a withdrawal. You pocket about $113, and your position is worth about $113 less. Tootsie Roll didn't send you that money. You did.

That's the difference between the two kinds of dividends:

When a company pays a cash dividend, real money leaves its checking account and lands in yours.
When it pays a stock dividend, no money moves anywhere. The company just creates new shares out of thin air. And since every shareholder got 3% more of them on the same morning, nobody's slice of the company got any bigger.

You could do the exact same thing with a company like Hershey (HSY). Sell three shares every March and you've "created" a 3% yield. Selling shares is what makes the cash. Not the split.

Commerce Bancshares (CBSH), a Kansas City bank, runs the same play every December, but with 5% instead of 3%. They've done it 32 years in a row.

Both companies are also Dividend Kings. Tootsie Roll, 60 straight years of dividend growth. Commerce, 58.

But look at the actual checks.

In 2013, Tootsie Roll paid 8 cents a quarter. Today it pays 9 cents. One penny in 13 years.

Commerce is wilder. In early 2025 they declared 27.5 cents a share. This past February they declared… 27.5 cents a share. The same exact check. And the press release called it a 5% increase and the 58th straight year of raises.

How? Because once you hand out 5% more shares, last year's 27.5 cents gets rewritten in the record books as 26.19 cents. Compare this year's 27.5 to that 26.19, and out pops "5% dividend growth."

If you pull up Commerce's payment history anywhere, that's the number you'll see — 26.19 cents, not 27.5. It looks like a typo, but it isn't. It's the same payment, rewritten to match a share count that grew after the fact.

The streak is legit. The raise is arithmetic.

To be fair, your cash income does creep up if you hold and never sell, because you own more shares collecting the same rate. That part is real money. But it happens automatically, whether the company had a great year or a lousy one. It has almost nothing to do with how much candy Tootsie Roll sold.

So why do it at all, for 32 and 60 years running?

Three reasons I found:

It keeps the streak alive without the board committing to a bigger check.
It costs no cash on the day they do it — it's mostly a bookkeeping move.
Shareholders seem to love it, partly because you don't owe a dime of tax on those extra shares until you sell them.

Now for that part that matter most:

Twenty years, dividends reinvested. $10,000 in Tootsie Roll became $26,295, about 4.95% a year.

$10,000 in Commerce became $37,233, about 6.79% a year.

But the same $10,000 in SPY became $83,526, about 11.19% a year!

And those numbers already include every stock dividend either company ever paid.

This is the same lesson as those covered-call ETFs I love to rip on. Big fat yield on the label, but when you check the total return, most of the funds are handing you a chunk of your own money back and calling it income.

There is no free lunch on Wall Street. Ever.

A dividend only grows for real when the business underneath it grows. More sales. More profit. Tootsie Roll is growing sales about 2% a year with a 10% return on equity. Very safe, and very slow.

For the record, I don't own either one, outside of whatever tiny sliver VTI gives me.

The most important takeaway is to check the total return. Always. The yield is a label, the split is a trick, and the business is the only true growth engine.

Talk soon, Russ

Video I'm Watching

I promise this isn't a weekly Simply Safe Dividends spot, but they shared three safe dividend stock ideas that are paying more than treasuries, with a 5%+ yield, investment grade credit rating, 15+ year dividend growth streak and 3%+ dividend raise this year.

Podcast I'm Listening To

No Robots Allowed

Sep 11 · Barron's Streetwise

26:27

Jack Hough on the always entertaining Barron's Streetwise podcast is weary from the constant AI talk and gave eight stock ideas (a few of them paying a dividend) that are growing and have little to no tech exposure. One of them is Royal Caribbean Cruises (RCL). Check it out to hear the other seven...

Disclaimer: This is not investment advice. Do your own research before making any investment decisions.

😁THANK YOU to all who responded to the last newsletter!!

Check out the portfolio on Blossom, the podcast, or see what’s cooking on YouTube.

And now, here is this week's portfolio activity...

Dividends Received This Week ~$53.51

ExxonMobil Holdings (XOM) | $45.32
Microsoft (MSFT) | $8.19

Dividends Received 2026 (Schwab Only)~

$3,263.21

Stocks Sold (AVERAGE)

1 Vanguard Total Stock Market ETF (VTI) | $373.48

Stocks Bought (AVERAGE)

5 VICI properties (VICI) | $24.75
3 Agree Realty (ADC) | $71.65
1 Amplify Intl. Dividend Income ETF (IDVO) | $42.75
4 Schwab Intl. Dividend ETF (SCHY) | $32.60

💰 GOING EX-DIVIDEND THIS WEEK 💰

9/14 UnitedHealth (UNH), 2.45% | 80S
9/15 Coca-Cola (KO), 2.40% | 80S
9/15 Merck (MRK), 2.36% | 90VS
9/15 Altria (MO), 6.44% | 60BS
9/15 Public Storage (PSA), 4.05% | 90VS
9/15 Domino's Pizza (DPZ), 2.55% | 55BS
9/15 Ares Capital (ARCC), 9.73% | 50BS
9/15 Allegion (ALLE), 1.43% | 61S
9/16 Prologis (PLD), 3.15% | 61S
9/16 Intercontinental Exchange (ICE), 1.32% | 80S
9/17 VICI Properties (VICI), 7.41% | 50BS
9/18 Restaurant Brands International (QSR), 3.38% | 45BS

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