In the Intelligent Investor graham says : ” investor should be able to count on the current 3.5% dividend return on his stocks and also an average annual appreciation of 4%. As we shall later explain this appreciation is based essentially on the reinvestments by the various companies of corresponding amount annually out of undistributed profits.”
Does this mean that average historical return of the stockmarket is 7.5% and it consist of 3.5% dividend yield and 4% of the appreciation in price which is fundamentally driven by retained earnings?
