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What Dow 20,000 Means to Me

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Yesterday, the Dow hit 20,000 for the first time. I remember vividly when the index hit 10,000 back in 1999 (Chart 1 below). Dow 20,000 took 17 1/2 years—a 4.2% compounded annual return, not including dividends. And that’s the key—not including dividends. Because for those of us that have been dividend-centric investors, the road from 10,000 to 20,000 has been a whole lot smoother. In fact, while the index has returned 101% from March 29, 1999 when it first hit 10,000 in price terms, when dividends are included, the total return becomes 205% (Chart 2 below). In other words, more than half of the return for investors during that time was delivered by dividends.

When the market is expensive, much like it is today, dividends should be your focus. Not only dividends, but consistent and reliable dividend increases. Both are the bedrock of Young Research’s Retirement Compounders common stock portfolio.

If stocks are expensive today, do you sell? No. It simply means you hope for the best but prepare for the worst. Dividends are for your long-term survival. Will Dow 30,000 be next? Or, will we revisit Dow 15,000? I don’t know the answer, but what I do know is that I want you to get paid to be invested in this market in the form of dividends and dividend increases. Your survival may depend on them.

dow jones industrial average reaches 20000 for the first time

dow jones price vs total returns

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.