Why Dividends Make Such a Big Difference

As quoted in an article by Jason Zweig, one financial planner noted that at least 20 times a year, he sees clients with statements from financial advisors that compare their client's performance to a dividend-less index. Small operators aren't alone in apparently fudging their numbers -- Zweig found similarly misleading comparions in newsletters from TheStreet.com and News Corp.'s (Nasdaq: NWS) MarketWatch division. How big a difference does excluding dividends make? Over the past 10 years, dividends have added more than two percentage points to the average annual return of the S&P 500. Indeed, from 1926 through 2006, 41% of the S&P 500's total return owed not to the price appreciation of its component stocks, but to those companies' dividends.... Read more