60 and a price appreciation of 2222 for a total

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Unformatted text preview: 39 Figure 2.10: Value of $ 100 invested in stocks in 1928 & Dividend Yields $40,000.00 Value of $ 100 invested in 1928 $35,000.00 $30,000.00 Average dividend yield portfoloio $25,000.00 $20,000.00 1010 High dividend yield portfolio $15,000.00 $10,000.00 $5,000.00 19 28 19 31 19 34 19 37 19 40 19 43 19 46 19 49 19 52 19 55 19 58 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 $0.00 year After taxes Portfolio (1/2 dividend yield) Portfolio (Double dividend yield) Data from Federal Reserve: The graphs represent the cumulated value of $ 100 invested in 1928 in each of the three portfolios (high dividend yield, average dividend yield and low dividend yield) Note that the portfolio of stocks with half the dividend yield of the market has an ending value of just over $ 30,000 in 2001, whereas one with a dividend yield twice that of the market has an ending value of roughly half that amount. An investor interested in building up a portfolio over time may find that much of the “excess return” analysts claim to find with high dividend yield portfolios may be dissipated by the higher tax liabili...
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This note was uploaded on 01/17/2012 for the course ECON 101 taught by Professor Econnorm during the Spring '11 term at Art Institutes Intl. Minnesota.

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