Total Return to Dividends

Here’s an interesting chart. This shows the S&P 500 Total Return Index divided by the S&P 500. In other words, this shows an investor’s return solely from dividends.

There seems to be a surge every three months (mid-May, mid-August, mid-November, and less so in February), when the bulk of dividends are paid out. You can also see that the fourth quarter was especially good for dividends as companies rushed to beat the taxman.

I think investors too often ignore dividends. Not only do you get money, but dividends are a good way to gauge a company’s health. It’s not fool-proof, but when a company raises its quarterly dividend, it’s often a sign of confidence that business is going well.

Posted by Eddy Elfenbein on February 5th, 2013 at 2:43 pm

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