Finding a new income approach

The benefits of an equity income strategy are well understood, although were often over looked during the years of strong capital gains for the equity market. In the long run, income has been a larger part of total returns than inflation, growth or valuation changes combined. In his paper, Dividends and the Three Dwarfs, Rob Arnott identified that total returns from the US equity market over 200 years had been 7.9%. The components of this return are shown in the table below. Reinvesting income is the key to building long term wealth. The annual Barclays Equity Gilt Study showed that £...