Just to drive the point home. First of all, my point is not not not
whether Vanguard Total Stock Market Index (VTSMX) or iShares Dow Jones Select Dividend Index (DVY) did better. For any two funds that are different, the results will be different and cheerleaders for the one that happened to do better will claim it's better while the cheerleaders for the one that didn't will have an alibi. Here's
the point, and it will take two charts to make it. VTSMX and DVY got about the same returns
, even though they got it in different ways
First, growth, the actual dollars you'd have if you invested in both funds and let your investment sit there and grow. About the same. (Certainly, DVY didn't do much better
.) Total Stock made you about $7,000, DVY made you about $6,000, over a different time period it might have been different. But about
the same. Squint, and the two lines sorta-kinda of merge together.
Now, look at price
They don't track together, they separate. DVY falls far, far behind.
The price per share for VTSMX is up about 44% overall over that time period, the price per share of DVY is only up about 13%. VTSMX share price gained three times as much as DVY.
But, as noted, both funds returned a total of $6,000-$7,000. In both
cases, the total return was considerably higher than the capital appreciation, which is represented by the increase in the share price. The extra return was the dividends. Total Stock got most
of that 60-70% return from capital appreciation, DVY got most
of it from dividends. DVY is as advertised. It did pay much higher dividends, but, just as you'd expect
, as a result, the shares themselves grew much less.
Total return is total return, no matter where it happens to come from.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.