5 ms·
Really? It just feels like dilution from IPOs would make it less percentage than the original stake.
by djbusby 5y ago
Really? It just feels like dilution from IPOs would make it less percentage than the original stake.
- SgtBastard 5y agoI’d read it as being a combination of dividends being re-invested over 40 years (including indirectly for share buy backs) if you did basically nothing.
- Retric 5y agoYes a large part of this is IPO’s are uncommon and companies go public early on when they are much smaller. But the other half is dividends collectively add up to enormous amounts of money. Microsoft’s ~0.8% dividend doesn’t sound like much but it’s ~15 billion dollars every year. It’s rare for a US IPO to be that large and few US companies IPO every year. Sure Facebook was $104 billion at IPO, but that’s the largest ever yet Microsoft’s dividend alone would have paid for it in less than a decade. PS: That’s looking at US companies, global IPO’s are tricky.
- bliteben 5y agoVOO (SP 500 index) has a current dividend yield of ~1.6%, ignoring that it was likely higher yield in the 80s and honestly much of this time frame, you use the rule of 70 to determine it would take about 43 years (70/1.6) to double from just dividends. Of course this ETF (the index did exist) didn't exist in the 80s, and you increased the valuation numbers much more due to inflation which was double this dividend rate for all of this period. Additionally somewhere in there, the US economy grew a lot in this time period.