Without financial alchemy, dividends will disappoint

Dividend growth will continue to disappoint the market unless some 'financial alchemy' comes in to play, explains Charles Luke from the Murray Income trust.

It is a little puzzling to hear market commentators talk about the FTSE 100 approaching a 14-year high. Why do they not look at performance on a total return basis? Do they not appreciate the importance of dividends?  Examining returns over the past 14 years and including the re-investment of dividends, shows that the FTSE 100 actually hit a new high in the middle of 2005. On this basis the market is now around 75% above its price index peak.  It is for this reason that Einstein called dividends and the compounding effect of income the eighth wonder of the world. Over the last coup...