RT Journal Article SR Electronic T1 Dividend Reinvestment, Price Appreciation and Capital Accumulation JF The Journal of Portfolio Management FD Institutional Investor Journals SP 119 OP 123 DO 10.3905/jpm.2006.628413 VO 32 IS 3 A1 Alfred Rappaport YR 2006 UL https://pm-research.com/content/32/3/119.abstract AB Studies of historical stock market performance invariably focus on total shareholder return (TSR). Contrary to its name, TSR does not represent the return earned by equity investors but is instead the capital accumulation rate investors achieve if they purchase shares at the start date, reinvest all dividends to buy additional shares, and hold all shares to the terminal date. Investors who use historical TSR rates as a point of departure for establishing their assumed capital accumulation rates can be misled in two ways. First, because only the rare investor can afford to reinvest all dividends and sell no shares over a lifetime, the capital accumulation rate will almost always be lower than the TSR rate. Second, the remarkable historical growth in accumulated capital from reinvested dividends can mistakenly persuade some investors that dividends, rather than price appreciation, govern investment performance. Departures from 100% dividend reinvestment affect capital accumulation, and once investors make the dividend reinvestment decision, capital accumulation depends entirely on price appreciation.TOPICS: Long-term/retirement investing, equity portfolio management, wealth management