One the face of it that statement is wrong. They must have some sort of reinvested, compounded methodology in mind.
From CNBC's Behind the Money:
If Congress fails to extend the Bush tax cuts on dividend income, they will be taking a direct hit at the most important part of an equity investment, one which accounts for nearly all of its return.
A subject near and dear to my heart. I may be the only person I've ever met who read every page of The Cowles Commission's Common Stock Indexes 1871-1937. [you must be a blast at parties -ed]
Lifted in toto from EconomPic Data:
Following my post Equity Valuation Matters, I received a request to show the results in real terms (presented here).
As I said then:
Please note this still misses a HUGE sources of return (dividends), which accounts for a much larger share of actual returns than people think. An almost identical amount as change in index in fact (dividend yield has averaged 4.49% since 1871, while returns on the index have averaged 4.45% over that same time frame). It makes the current ~2% dividend yield look awfully small.
I will look to show results of total S&P 500 return vs. the Fair Value method next week.
Does Stock-Market Data Really Go Back 200 Years?Here goes...
General Electric Dividend: Good Sign or Management out of Ideas? (GE)
Up and Down Wall Street: Rob Arnott "After Lost Decade, It's Still Tough to Find Returns "
Equity Risk Premium: "Why the market’s rate of return—and your nest egg—may never recover"
"Snoop Dogg tries to rent entire country of Liechtenstein"
A Really Smart Guy On Stocks, Bonds and Expected Returns
What Risk Premium Is “Normal”?
The Financial Times Gets to the Heart of What Société Générale's Albert Edwards is Saying (Sept. 24, 2010)