x.com/Owennfa/status/2108608213398770076
1 correction found
The dividends alone off that would be $168,000 a year.
This confuses an index fund’s total return with its dividend yield. A 7% average return is not the same thing as receiving 7% cash dividends each year.
Full reasoning
Averaging 7% annually in an index fund refers to total return, not dividend income alone.
Authoritative descriptions of the S&P 500 Total Return Index say total return reflects both stock-price changes and reinvested dividends. In other words, the 7% assumption already includes capital appreciation; it is not a 7% dividend payout.
Official Vanguard data for VOO (Vanguard S&P 500 ETF) shows a dividend yield of about 1.07% and a 30-day SEC yield of about 1.00% as of July 31, 2026. On a $2.4 million balance, a 1.07% dividend yield would be about $25,680 per year, not $168,000.
So the error is the post treating a 7% average total return as if it were a 7% annual dividend yield. Those are different concepts, and the claimed dividend amount is overstated by a very large margin.
2 sources
- SEC filing describing the S&P 500 Total Return Index
The Total Return Index represents the total return earned in a portfolio that tracks the S&P 500® Index and reinvests dividend income in the overall index... The total return construction reflects both movements in stock prices and the reinvestment of dividend income.
- VOO - Vanguard S&P 500 ETF
DIVIDEND YIELD 1.07% as of 07/31/2026 ... 30 day SEC yield 1.00% as of 07/31/2026.