Do Not Forget About Dividends

Picture this. You've just finished running a marathon. You haven't had a drink of water in the past five miles, and your throat is parched. As you walk through the finish line, someone hands you a drink. Looking at the clear liquid that you presume to be water, you greedily take a big gulp and then realize: oh no, it's tequila. That's how I feel every time I read an article that talks about the performance of a given stock or index over time without including dividends, as if dividends are this optional consideration that can either be included or not, like putting a slice of cheese on a hamburger. The St. Louis Post-Dispatch ran a financial column titled "Stocks Quickly Went Nowhere in 2011" that mentioned: "The S&P 500 Index of big companies ended the year flat, down a mere 0.003%...Profits rose 12% at big companies while stocks were... Read more