Re: Why Sklansky\'s idea should not work
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I have read that dividends account for half the stock markets return historically. Thats why today's yields of <2% are upsetting.
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In the 1920s and 1930s the Dow averaged 5% dividend yields. In 1932 it's dividend yield was over 15%. Historical yields by decade are in "The Intelligent Investor". I am on the road so this is from memory.
Yields started to decline in the 1970s because dividends were triple taxed. Reagan fixed that but companies had discovered the benefits of stock buybacks. The biggest benefits of buybacks is for option holders who need price appreciation to get rich, I.e. management. Bush's dividend tax cuts makes dividends even more attractive but my guess is that mgmt will still favor buybacks and most future gains will have to come from price appreciation.
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