“ It's worth noting that, unsurprisingly, the fraction of total return coming from dividends was higher in the deep past when dividend yields were very much higher. The average dividend yield of the S&P 500 and its predecessors in (say) the 1950s was 4.88%, versus 1.53% in the 2020s so far. Different starting situations mean different outcomes. Phrased another way: if your portfolio is yielding a 2% dividend rising with inflation and you're expecting a total return of (say) inflation + 6.5%/year, dividends are necessarily going to provide less than a third of your total returns if you meet your return goal. Not 85%.”

Though it occurs to me that 1.53% could well be 85% of the real return from the S&P500 for the next 10 years or so…

Berkshire Hathaway FAQ

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