Some folks think chasing dividends is, well, a bit stodgy and more for the conservative investor or one with retirement coming up. But dividends can do surprising things to spice up returns over time, thanks to the power of compounding. That point is proven by S&P Indices' Senior Index Analyst Howard Silverblatt. He reports that the S&P 500 Total Return Index, which includes both stock gains and dividends, reached an all-time high at 2,449.1 Monday, displacing the October 9, 2007, record of 2,447.
The new record represents a rise of 0.1% from peak to peak in roughly 4 1/2 years. And what makes up that gain for the index? Well, the equity value of it is down 9.3%, while the dividend portion returned 9.4%, which means dividend returns kept the index above water. Put simply, $10,000 invested in the S&P 500 Total Return Index on Oct. 9, 2007, was worth about $10,008 Monday, made up of $9,066 in stock value and $942 in dividends.
Source: The Street
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