My friend Eddy caught someone spewing spurious spools of spotty spunk about how much of the stock market’s return is “derived” from dividends. It was hilarious nonsense, Eddy nailed it.
Anyway, I thought I’d chime in here with some real figures courtesy of S&P via On Wall Street:
Since 1926, dividends have accounted for more than 40% of the total return for the S&P 500.
More recently, during the period from Dec. 31, 1999 through May 31 of this year, a group of 42 stocks, dubbed the S&P Dividend Aristocrats, that have all consistently paid increased cash dividends year on year for at least 25 years and showed a total gain of 141%, including dividends. Over that same time period, the total return of the S&P (including those 42 companies) was just 13%.
What is a Dividend Aristocrat? It’s a company deemed by S&P to be a consistent and stable dividend payer based on several quantitative factors. I’ve been falling in love with some of the Dividend Aristocrat ETPs out there over the last several quarters. Or maybe its not really love but just a rebound relationship from the bond funds I’m having a messy breakup with.
To learn more about the various Dividend Aristocrat indexes and how they’re constituted, download S&P’s fact sheet here: