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From Professor Robert Shiller’s data:

S&P500 dividend yield in January 1966 was 2.9%.

From my article “Taken At Face Value”:

Failure Mechanism

Because there are no sales, the failure mechanism would be a drop in the purchasing power of dividends. The worse case for the S&P500 index after 1950 (using January values) was a drop from $16.606 in 1967 to $12.567 in 1976. This was a drop to 75.7% of the original buying power. It took until 1990 to gain a full recovery.

Dividend Investors typically get twice the yield of the S&P500. Today, that would correspond to a yield of 3.5%.

Dividend Investors in 1966 could easily get 5.8% yields from quality companies.

The worst case drop in buying power would have brought this down to 4.4% of the original balance (plus inflation). This assumes the S&P500 dividend growth rate, no better.

The retiree would NEVER go bankrupt.

Have fun.

John Walter Russell
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