This is genuinely one of the best empirical analyses of dividend investing I've ever read. The Buffett framing at the beginning is perfect - he earns billions from dividends yet refuses to pay them, which perfectly captures the paradox. Your data tells a powerful story: reinvested dividends delivered 20-27% CAGRs while the same stocks without reinvestment barely scraped 8-15%. That 12% annual drag from not compounding is absolutely massive over a decade. The yellow bars clustering close to the green bars is the most important chart here. It shows that when dividends are reinvested, the 'slow dividend payer' narrative completely falls apart. You're not far behind growth stocks at all - the gap is just 3-8% annualized, not 15-20% like many assume. The blue bars, however, tell a cautionary tale. Taking dividends as cash is actively harmful to wealth creation. It's essentially a forced distribution that creates taxable events and breaks the compounding chain. The disclaimer section is also appreciated - accounting for taxes and transaction costs would lower all three approaches slightly, but the relative rankings would likely stay the same. My only question is about survivorship bias - did you account for companies that went bust or got delisted during the 10-year period? Those would disproportionally affect the high-dividend group, which often includes cyclical and capital-intensive businesses. Regardles, this study confirms what Buffett has always said: it's not whether the company pays dividends that matters - it's what happens to the earnings, whether reinvested internally or externally. Exceptional work.
This comparison is Awesome and Beautiful. Kudos to your team for great efforts on researching this aspect. For common man who prefers MF over stocks It will also be helpful if similar analysis is presented about Mutual funds. Thanks once again for sincere, diligent and meticulously worked out article
This is genuinely one of the best empirical analyses of dividend investing I've ever read. The Buffett framing at the beginning is perfect - he earns billions from dividends yet refuses to pay them, which perfectly captures the paradox. Your data tells a powerful story: reinvested dividends delivered 20-27% CAGRs while the same stocks without reinvestment barely scraped 8-15%. That 12% annual drag from not compounding is absolutely massive over a decade. The yellow bars clustering close to the green bars is the most important chart here. It shows that when dividends are reinvested, the 'slow dividend payer' narrative completely falls apart. You're not far behind growth stocks at all - the gap is just 3-8% annualized, not 15-20% like many assume. The blue bars, however, tell a cautionary tale. Taking dividends as cash is actively harmful to wealth creation. It's essentially a forced distribution that creates taxable events and breaks the compounding chain. The disclaimer section is also appreciated - accounting for taxes and transaction costs would lower all three approaches slightly, but the relative rankings would likely stay the same. My only question is about survivorship bias - did you account for companies that went bust or got delisted during the 10-year period? Those would disproportionally affect the high-dividend group, which often includes cyclical and capital-intensive businesses. Regardles, this study confirms what Buffett has always said: it's not whether the company pays dividends that matters - it's what happens to the earnings, whether reinvested internally or externally. Exceptional work.
This comparison is Awesome and Beautiful. Kudos to your team for great efforts on researching this aspect. For common man who prefers MF over stocks It will also be helpful if similar analysis is presented about Mutual funds. Thanks once again for sincere, diligent and meticulously worked out article
In one sentence is that very practical and use6
Agreed!! The author's verbose writing style made it difficult to find the main points.