(This is a follow up to my expense ratio question, here).
Today I am attempting to study and compare the various Large Cap ETFs but realize I don't know how to even do the comparison, namely in regards to expense ratios and dividends.
For example, take the IVW - iShares S&P 500 Growth ETF and the RPG - S&P 500 Pure Growth ETF. Both of these ETFs track the S&P 500/Citigroup Growth Index.
The 5 year return of IVW is 125.43%, with an expense ratio of 0.18%, an Annual Dividend Rate of $1.47, and an Annual Dividend Yielf of 1.38%.
The 5 year return of RPG is 183.31%, with an expense ratio of 0.35%, an Annual Dividend Rate of $0.53, and an Annual Dividend Yield of 0.67%.
First question: when I see the "5 year return" of an ETF or mutual fund, I am assuming this is the return not accounting for the expense ratio and dividend; is this correct? Otherwise, this question is mute.
Now let's assume I have calculated the return less the expense ratio.
Let's say I put in $100 to both of these funds 5 years ago. Not accounting for the expense ratio, today, that $100 would have grown to $225.43 and $283.31 for IVW and RPG, respectively.
My question is essentially: when and on what basis do calculate the dividend bonus? Do I multiply the annual dividend yield to the market value of my shares in the ETF at the end of the year, and add that to my market value?
Do dividends not actually get paid every year on the spot like annual expense ratios do? Can the dividend ratio change? If so, does it usually change, especially to the point that doing these calculations are worthless because they can't be predicted for the long term investor?