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Half-truths for income investors

A common chart crime tells us a lot about how easy it is to misunderstand the importance of dividends
Half-truths for income investors
  • A historic chart crime
  • Dividends just are just another capital allocation decision
  • Dividends implicitly suggest there’s no more exciting use for the money
  • The source of total return is by-the-by

Have you ever had the importance of dividends explained to you with a graph that compares the return from an index when dividends are included versus when they are not? 

It looks impressive, as you can see below, and it’s trotted out with some regularly.

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