Total Return Charts

Recently I realized that for several brokerage accounts the dividends were being paid in cash rather than additional shares.  I can't imagine why, but I changed the accounts such that dividends and interest will be reinvested.  Comparing the performance of dividend and interest paying investments will be simpler which was the primary motivation for the change.  With this issue fresh in my mind, a few days ago I ran across an article by Matt Hougan.

Hougan has two main points.  First, (nearly) all charts are price charts that do not include dividend and interest payments.  Second, because the charts don't include dividend and interest payments, all technical analysis is bogus.  I'm not a technician and will happily skip the second point.  The first point, however, is fundamental.  I've casually wondered if the charts I look at include dividends and interest payments, but until now was never certain.  Mea culpa.  Charts from brokerage accounts, stockcharts.com, Yahoo.com, MSN Money, and the like are price charts, not total return charts.  I can find two exceptions.

etfreplay.com charts are total return charts that work for ETFs, but not mutual funds or stocks.  Another option is the What If You Had Invested charts at sharebuilder.com.  Here's a sharebuilder chart of KMR's return including dividends.

And here's the KMR chart without dividends:

Don't be misled by the similar shapes-- total return with dividends is approximately twice that without dividends.

Both etfreplay and sharebuilder have limitations and won't always provide the precise chart needed.  But that's not the point.  The real point is make sure you understand the basis for the chart you're using.  When comparing investments, be particularly mindful if any pay dividends or interest.  If you're sometimes asleep at the switch like me, the old adage about comparing apples and oranges may just bite you.