Dividend Reinvestment Chart?

[tommog]

Hi all,

I have money invested in various mutual funds as part of my long term savings/pension. I find they are a very simple and effective way of saving/investing. But i'm well aware of the fact the 1-2% annual management fee can seriously impact your long term compounded rate. So I would also like to invest in individual stocks to keep costs lower.

My question is, is there a free charting tool online that shows the historical returns of a particular stock assuming the dividend was reinvested? For example looking at the FTSE 100 over a 10 year period the price is slightly lower than where it was 10 years ago. But would be good to see what the prce would be assuming you reinvested the annual dividend for that 10 year period also. Hope that make sense.

There are various charts that highlight with an asterix or something when a dividend was paid, but nothing that adjusts price in accordance.

Thanks

 

[Jack o'Clubs]

It's a good point / question. Most indices (including FTSE) will have a TR version and I don't know why they aren't more commonly used - you should be able to find the code fairly easily for your current chart package, eg TUKXG instead of UKX for the FTSE100.

On individual stocks, I don't know free resources that do it for you, but certainly Bloomberg allows you to plot TR versions of performance - I guess they're not that popular because you end up with an index value which is different to the actual stock price that you're trying to trade from, and also tax treatment of dividends means the TR you plot may not be the same as the TR you experience as an investor, due to withholding tax, dividend tax credits, etc.

 

[tommog]

thanks for the reply Jack,
Yeah i guess that makes sense regarding the stock reinvestment chart. Its just so much easier with funds because dividends and capital appreciation are reflected in the overall price and therefore annual return.

Looking at some of the stock prices historically it makes you think people are mad having stocks in a long term portfolio, they are all over the place without the smoothing effect of an extra 4-5% a year in dividends.

On a slightly different thread I read somewhere if you take out dividends and inflation the stock market hasnt returned you anything in 100 years or something. I have no idea if that is correct but goes to show what an important part dividend reinvestment plays in a savings plan.

 

[Jack o'Clubs]

On a slightly different thread I read somewhere if you take out dividends and inflation the stock market hasnt returned you anything in 100 years or something. I have no idea if that is correct but goes to show what an important part dividend reinvestment plays in a savings plan.

Present value of $100 invested in (US) equities in 1925, without dividend reinvestment = $778 (in real terms). Present value of $100 invested in US equities in 1925 with dividend reinvestment = $24,733 (in real terms). 'The most powerful force in the universe is compound interest' as Einstein once said.

 

[tommog]

yeah that sounds about right. Pretty incredible