Stocks with the best long run total returns are almost invariably those with a high return on shareholders' equity and on assets
...
I believe that there is a huge population of investors who are myopically investing for income over long periods who would do VERY much better if they instead invested in the very best companies they could identify, without regard to dividends, and sold little bits of stock

An even more off topic comment related to that: there is nothing wrong with trying to do both, I suppose. Do something to make sure you're picking among the best firms you can, but which also just happen to have some dividend yield.

I used the free FT.com global equity screener to find UK dividend payers with high ROE. Over 100m market cap, debt:capital not too high, not local listings of foreign firms. I picked a subset of industries that I'm comfortable with. (no funds, tobacco, basic energy, REITs...)
The 45 stocks have minimum 5-year-average ROE of 18%, average among the list is 33.2%
The 45 stocks have minimum dividend yield of 3%, average among the list is 5.65%
The 45 stocks have maximum debt:capital of 40%, average among the list is 16.9%

I imagine an equally weighted portfolio of these firms would give satisfactory returns. It could be rebalanced or reconstructed once in a while, a few months or a few years. My speculation is that this would do better than a basket of UK REITs because the firms can, and apparently do, get good returns on the capital they allocate. (though perhaps not, UK REITs seem to be quite cheap just at the moment)

Anyway, in case anybody has any interest in that exercise, the names today are:

Victorian Plumbing Group PLC VIC:LSE
Ultimate Products PLC ULTP:LSE
4imprint Group PLC FOUR:LSE
ITV PLC ITV:LSE
Wilmington PLC WIL:LSE
Warpaint London PLC W7L:LSE
Cake Box Holdings PLC CBOX:LSE
Greggs PLC GRG:LSE
Supreme PLC SUP:LSE
Serica Energy PLC SQZ:LSE
Mortgage Advice Bureau (Holdings) PLC MAB1:LSE
AJ Bell PLC AJB:LSE
CMC Markets PLC CMCX:LSE
Foresight Group Holdings Ltd FSG:LSE
Impax Asset Management Group PLC IPX:LSE
IntegraFin Holdings PLC IHP:LSE
Man Group PLC EMG:LSE
Ninety One PLC N91:LSE
Polar Capital Holdings PLC POLR:LSE
Record PLC REC:LSE
Tatton Asset Management PLC TAM:LSE
Tavistock Investments PLC TAVI:LSE
Hansard Global PLC HSD:LSE
Integrated Diagnostics Holdings PLC IDHC:LSE
Bioventix PLC BVXP:LSE
Alumasc Group PLC ALU:LSE
James Halstead PLC JHD:LSE
Keller Group PLC KLR:LSE
Morgan Sindall Group PLC MGNS:LSE
Luceco PLC LUCE:LSE
Andrews Sykes Group PLC ASY:LSE
FDM Group (Holdings) PLC FDM:LSE
Fonix PLC FNX:LSE
FRP Advisory Group PLC FRP:LSE
Keystone Law Group PLC KEYS:LSE
Pagegroup PLC PAGE:LSE
SThree PLC STEM:LSE
M Winkworth PLC WINK:LSE
Bytes Technology Group PLC BYIT:LSE
Ingenta PLC ING:LSE
Kainos Group PLC KNOS:LSE
MONY Group PLC MONY:LSE
Quartix Technologies PLC QTX:LSE
Catalyst Media Group PLC CMX:LSE
Yu Group PLC YU.:LSE

There are undoubtedly some very bad looking firms in that list, and undoubtedly some very bad firms. However, if using this sort of approach, I recommend using the whole slate rather than pruning, as those two groups are often very different. Murphy's Law of quant investing: the dog you eliminate is often the one that gives the highest return. Spend your time stress testing the logic and details of the screen, not the individual firms it picks. Would you be interested in a single stock that had 5.65% dividend yield, five year average ROE of 33%, debt of only 17% of equity, and absolutely guaranteed not to go bust? (like an index, I assume it's essentially impossible for all 45 companies to explode)

Jim