Benchmarking Dividend Income

The investment returns of most fund managers are generally compared against a common benchmark. This provides for an objective evaluation of their performance over a period of time. A common benchmark for most mutual fund managers is the total returns of the S&P 500 index. This benchmark is also useful for comparison to dividend investors as well. For many long-term dividend investors however, income growth is very important as well. Thus having an increase or decrease in dividend incomes does not mean much, unless it is being compared to a common benchmark. While there have been several dividend indexes such as the Dividend Aristocrats and the Dividend Achievers, which have dividend ETFs that provide accurate information on dividend and price returns, these have not been around as much as the broad S&P 500 index. In addition to that the S&P 500 is sector diversified, and most information is widely available. Because of that, I would consider the changes in annual dividend income of the S&P 500 index as an important barometer against which to benchmark your dividend income over time.... Read more