The bull market in US equities has continued this year with the S&P 500 up by over 24% YTD on price return basis. In the past 5 years the S&P 500’s returns has had an incredible run with an annualized return of 13%.

While the S&P 500’s return is 24% based on price returns so far this year, the total return which includes dividends reinvested is about 28%. As of November this year, the dividend yield of the index is 1.25%. The dividend yield is low by international standards and has remained under 2% for many decades. However even with a small yield, the total returns earned over many years will be boosted many times over price returns due to the effect of compounding. This is demonstrated by the following chart which shows the S&P 500 Price Return against Total Returns from 1960 to 2023:

Click to enlarge

Source: The Power of Dividends: Past, Present, and Future, Hartford Funds

The difference in returns is indeed astonishing. So though some investors ignore dividends and focus only on growth it is important to pay attention to dividend yield too.

Related ETFs:

1. SPDR S&P 500 ETF (SPY)
2. iShares Core S&P 500 ETF (IVV)
3. Vanguard S&P 500 ETF(VOO)
4. SPDR Portfolio S&P 500 ETF  (SPLG)
5. SPDR® Portfolio S&P 500® High Dividend ETF (SPYD)

Disclosure: No positions