S&P 500 dividend dollar growth

Investing
#1

We know the VOO yield is generally gona be around 1-2%…… so someone buying 1 million dollars of VOO will get 10-20k per year in dividends . But what about the person who has been buying VOO for 10-20 years … their YOC will much higher than 1-2%. So rather than just focusing on the 4% withdrawal… what about how much $ their VOO holding will kick out after 20 years investing. As the dividend in $ terms is growing at roughly 10% per year. If invest 1 Million into VOO today… how much $ in dividends will I get in 20 years? Anyone care to guesstimate the dollar amount or add some info please share

As I see VOO as a dividend growth play

#2

Hey @Rider!

I’m not quite sure I understand your question. What’s YOC?

Dividends for VOO are paid quarterly. When the investor receives the dividends they can take that cash and do something with it (like spend it) or it can be reinvested. Either way, the dividend is paid based on the balance in the fund at the time. So if you have been investing for 20 years and the total value of your VOO fund is $1M, you’d get the same dividend that year as if you invested $1M in cash for the first time. Does that help or am I misunderstanding your question?

#3

Thanks Jeremy

YOC= yield on cost

Maybe I’m not clear

If someone invests 1m USD today in VOO they will receive around 15k USD in dividends

How much in USD will they receive in 20 years if they don’t invest another dollar?

Because the dividend in dollar terms will grow

So even if they don’t invest another dollar, they will receive a lot more than 15k

As VOO dividend tends to grow around 10% per year

Is it 15k * 10% * 20 years?

Appreciate your thoughts

#4

So let’s say someone invests $1M and they get a 2% dividend. At the end of the year they would get $20K. Let’s also say the share price of VOO increases by 8%. So at the end of the year their shares would be worth $1,080,000 and they’d have another $20K in cash. If the “reinvest” that dividend, by buying more shares the would end up with $1,100,000 worth of VOO at the end of the year, for 10% total growth (8% growth of the share price, 2% paid in dividends used to reinvest).

If this continues for 20 years, they’d have $1M * 1.1^20 = $6.7M total.

In that 20th year, a 2% dividend is now worth about $134,000.

Does that help clarify?!

#5

Thats exactly it! Very clear! Much appreciated Jeremy