I have been fooling around with google finance, but finding it hard to look at historical data to try and understand some of the principles of investing. I hear a lot about how dividend payments being so lucrative.
Is there a site i could enter in data and see the previous trends and dividend payments for certain stocks? I know historical data is just history, but i am trying to better understand what i am getting myself into. I like to see how numbers change and grow in an effort to understand more about what i could be doing. I've been reading the Canadian couch potato, MMM, the bogglehead books and the millionaire teacher. Thanks.
I'm not aware of any resources that follow dividend payments for specific stocks going back very far. But I can link to an amazing post by walkworks that I think answers your question:
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This just shows that the author doesn't understand (or isn't explaining) exponential functions well. Think of it this way:
-If I have a stock that I hold for 100 years that appreciates 1% per year and pays no dividends, after 100 years, I've got $270.
-If I have a stock that I hold for 100 years that appreciates zero, and pays 1% dividends (which I reinvest) and we assume no taxation on those dividends, I also have $270.
-If my stock both appreciates 1% and pays 1% (reinvested) dividends, I have $724.
Now, in that scenario, I would never say that *either* the capital gains or the dividend is mostly responsible for the extra gains, right? In fact, a rational person would say that both are responsible for 50% of the gains.
Let's look at another scenario.
-Capital gains @6% and no dividends. My $100 is now $33,930.
-Dividends @4% and no capital gains. My $100 is $5,050.
-Both added together (as the Bogle example) for a total of 10%/year. $100 becomes $1,378,000!
Now stop for a minute and think. When I added in the dividends, I suddenly had way more money! 97.5% of my gains came because I reinvested them! Dividends are awesome!
BUT - you could just spin it the other way and say that the capital gains accounted for 99.6% of the gains when you start from the default state of an only-dividend scenario.
The point is this: assessing your gains in the way that you are doing it is insane. If you are getting 6% from capital gains and 4% from dividends, then 60% of your gains are capital gains. Period. Otherwise over any long time scale, adding in ANY RANDOM FACTOR that boosts the investment yield will "account for" most of your profit.
That's just how exponents work. I could add in a special "magic investor bonus" of 1% on top of that 10% and it would "account for" most of my gains over that time period (in fact, my 1% magic-factor raises my total to a cool $3.4 million - the vast majority of my gains!)
The point is that you should put money in when you can, not that dividends are the majority of the gains of the market.
-W
http://forum.mrmoneymustache.com/investor-alley/understanding-dividends-strategies/msg476335/#msg476335
