Well, the clue is in the title and it is an easy point to illustrate: -
If you had an investment that just tracked the price of the FTSE-100 from 1st January 2000 to today (and there's no particular reason to select the 1st January, the outset of the new Millenium seemed like a nice place to start ...) then the return would be -19.96%.
The price of the index has fallen from 6,930 as at 31/12/1999 to 5,568 as at 6th December 2011. That does not sound like a particularly attractive investment over almost 11 years. But, add in the dividend yield over that period and the TOTAL RETURN is + 19.47%. Still not earth-shattering, but nevertheless a difference of almost 40%, and that is worthy of a few shards of soil.....
So, as an equity 'investor' as opposed to an out and out 'speculator,' how important is yield? EXCEPTIONALLY.
[data supplied by Financial Express, 08 December 2011]
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