Not so. Let's say you bought a share 10 years ago at $70. The value of your investment is also $70.Today, that same share is worth $160, and the value of your investment is $160. Other factors, like inflation, the price of eggs in Darwin, etc..are all irrelevant. If you get paid a dividend of $2.20 today, the return on your investment is calculated on today's value, because this is what your investment is worth today. What you paid 10 years ago is irrelevant. This is because holding the stock today means you forgo the opportunity to put the money value of today's investment to alternative use, if you were to sell. This is termed the "opportunity cost" of holding the stock, as alluded to by "JUSTBOB" in an earlier post.
Consider this: assume the SP is $10 billion today. Would you still justify NOT selling your single share on the grounds that it pays a 6% dividend calculated on what you paid for it 10 years ago ($70)? I have chosen an extreme example merely to illustrate a point.
CBA Price at posting:
$160.56 Sentiment: Buy Disclosure: Held
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