Portfolio Ideas

[Jon39]

WindyCommon said:

I think we have had this discussion before, but you really should look at the component of equity market returns represented by dividends. I think it will surprise you.

Yes, I appreciate that dividends do form a significant portion of long-term equity performance. There will be some years on my bar chart (above), where a narrow win was not really a win at all. Last year with the 22.17% (against market 12.45%), it would not have made any difference, because that was a clear win, with or without dividends.

When my portfolio began, there was not much data available. The end of the week valuation had to wait until a Saturday newspaper was available. With smaller overseas companies, you were completely in the dark about share prices. How times change. Maybe the All-Share Index including dividends, was buried deep in the FT in those days, but I did not know anything about it. I suppose, unless the including dividends index, only shows dividends starting each year from January, it would not help me to improve accuracy anyway. How is that index based?

I find the overall subject of dividends slightly strange. Shareholders own the entire business, and when dividends are paid to the shareholders, it is therefore with money that the shareholders already own. The value of the business consequently reduces, because that cash is no longer an asset. Anyway leaving that technicality aside, I think most shareholders like the system of regular dividend payments, although possibly for the reason mentioned, I don't think Berkshire Hathaway ever pay out dividends.

Edited by Jon39 on Sunday 22 October 09:36