To the average investor, dividends matter. Lee points out that from 1900 to 2010, the U.S. stock market generated a 6.17% annualized real growth, with 4.24% of the returns coming from dividends alone.
As the S&P 500 sits at 1,400, with yields at about 2%, and annualized real per-share dividend growth of around one to two percent, Lee estimates that the U.S. stock investor can expect a long-term 3.5% to 4.5% annualized real return.
Vanguard Dividend Appreciation ETF
For more information on dividend generating funds, visit our dividend ETFs category.
Max Chen contributed to this article.