The S&P 500 is currently 1.3% away from its all-time closing high of 2130.82 set on May 21, 2015. But did you know that the S&P 500 Total Return Index made a new all-time high yesterday? The difference is the total return includes dividends, whereas the S&P 500 is price only.
If you think about it, a few percentage points a year reinvested over time can make a big difference in a portfolio. Here is what each year since 2000 has looked like with and without dividends reinvested.
What does this mean in the real world? Hypothetically, if $100 was invested in the S&P 500 at the start of 2000, it would be worth $139 as of the end of 2015. If dividends were reinvested? It goes up to $187, or nearly 35% higher.
Dividends are the quiet wealth builder to portfolios over time. A few percent a year might not sound like a lot, but when done over decades, the end result to a portfolio is very significant.
Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
Stock investing involves risk including loss of principal.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
This research material has been prepared by LPL Financial LLC.
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