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Don’t Make Me Say I Told You So 119

you may benefit from both increased dividend income and a
rising stock price.

Impact of Dividend Reinvestment Over Time, 1998 - 2019
Growth of $10,000: Principal vs. Reinvested Distributions

$40,000 DELETE THIS CHART
Stocks, Principal Only
Stocks, Dividends Only

$32,421
$30,000

$21,989
$20,000

$10,000

2000 2003 2006 2009 2012 2015 2018
Source: Morningstar, 2020. Stocks with dividends reinvested—Ibbotson® Large Company Stock Index; Stocks principal only—Ibbotson® Large Company Stock Index
Capital Appreciation Index. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance
is no guarantee of future results. Returns and principal invested in stocks are not guaranteed. Dividends are not guaranteed and are paid at the discretion of the stock-issuing company.

Yield Tax rate After Tax Return After Tax Annual Income
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Stock dividend 2.5% 15% 2.12% $10,600
Fixed income yield 2.5% 30% 1.75% $8,750

Stock dividends tend to rise over time, while interest from
bonds or fixed- income remains fixed until the bond matures.

Additionally, the stock investor may have capital appreciation
with their investment, which is not going to happen with a CD.

Chapter 3: You Must Have Growth In Your Portfolio