The Dividend Return to Investors

by Eddy Elfenbein, Crossing Wall Street

Here’s an interesting chart you don’t see often. This is the return to investors from dividends.

This is different from the market’s dividend yield, and it’s more accurate. This tells us how much money actually went to investors solely from dividends.

I took the Wilshire 5000 Total Return Index and divided it by the regular Wilshire 5000. I then saw how much that had changed in the last year.

In plainer terms, this isn’t just indicated dividend yield, what you most often see; it’s the dividend yield adjusted for increases or decreases in those dividends.

During the worst of the financial crisis, the market’s indicated dividend yield rose to 4% or so. But that’s based on trailing dividends — what had been paid out. But those payouts were cut. In real terms, dividends yielded investors 2.55%.

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