Value Investing News

Dividends have historically contributed 35% - 40% of annual total returns over the past century. Re-invested dividends however are touted to have provided 97% of S&P 500 total returns between 1871 and 2008.

The main pro of dividend reinvestment is that you get the power of compounding in your favor. If you have also picked a solid stock that tends to increase the payments to stockholders every year you are essentially turbo charging your portfolio for the long run and should expect to receive even faster annual dividend raises.

• http://www.dividendgrowthinvestor.com/2009/03/drips-for-faster-compounding-dividends.html (1)