TueIf some shareholders are unhappy with their portfolio’s miserable state and wonder why Dax reached a record high on Friday but their own portfolio is far from it, the solution to the puzzle may lie in dividends. Because the index assumes that dividends are immediately reinvested in the purchase of shares. And what kind of investor does this? But the effect is huge, as our diagram shows. The classic Dax index (including dividends) has just risen to an all-time high of over 16,300 points. But if you only relied on stock prices and used dividends for vacations, good food, or car repairs, you only get a measly 6,400 index points.
Both indexes started at 1,000 points in 1988. And in March 2000, the Dax index reached a good 8000 points, and its price index – 6266 points. Since then, the Dax has more than doubled in dividends, while the price index has only risen 3 percent. It’s not Adidas’ fault that things are getting so tedious: the price has gone up 1,138 percent since then. Merck entered Dax later, but can look back at a 984 percent price hike. VW by at least 409 percent, BMW by 310 percent, Mercedes by only 33 percent.
Source: Frantfurter Allgemeine
I work as an author at the World Herald News, a news website that also covers the economy. I have been writing about economic topics for over six years and have written extensively on topics such as unemployment, housing prices, and the stock market. My goal is to provide readers with expert insight into these important issues so they can make informed decisions.