Key insights
- Most US indexes, including the Dow Jones, are not adjusted for dividends. Therefore, the index value can decrease on the ex-dividend date. This explains how an investor could outperform the Dow during periods of market decline by reinvesting dividends. This highlights the importance of considering total return (price appreciation + dividends) when evaluating investment performance, especially over long periods.
Surprisingly web search returns results for stock prices (they obviously go down other things equal in case of large dividend).
But I've always assumed indexes are adjusted for dividend payouts (so index opens same value on ex-dividend date, not dips down). Is it correct for all major indexes or not?
Was it the same way before, e.g. near time of the Great Depression, 1930s?
Edit:
seems I was wrong, most [US] indexes are not adjusted for dividends.
Background for the post: I've read in a book a person who invested ~4000k over period of 1929-1948 into largest US companies got ~8000 at the end whereas Dow fell from ~300 to ~150. I can only explain the above by companies paying large dividends during that period - Dow fell but invested value along with reinvestment of dividends grew.