The basic stock chart tracks the price of the stock. As discussed here the price of the stock drops by the amount of the dividend. So when a dividend pays out the stock chart makes it look like shareholder value decreased even though it didn't. (The stock price decreased by the amount of the dividend that was paid to shareholders.)
So how do I factor in the dividend to see the true shareholder value in graphical format?
Instead of a price chart can use a performance chart, which is usually expressed as a percentage increase from the original purchase price. To factor in the dividends, you can either add in all of your dividends to the final price, or subtract the accumulated dividends from your cost basis (the initial price).
Usually I've seen people treat the dividend like a separate cash flow, which is discounted if the company doesn't have a well-established dividend history. I've never really seen dividends rolled into a total return chart (except in the context of an article), probably because dividend reinvestment is a nightmare of record-keeping in a taxable account, and most folks don't do it.
One of my brokers (TD Ameritrade) does allow you to plot dividend yield historically on their charts.
Good observation. In fact, the S&P index itself is guilty of not including dividends. So when you look at the index alone, the delta between any two points in time diverges, and the 20 return observed if one fails to include dividends is meaningless, in my my humble opinion.
Yahoo finance will let you look at a stock ticker and offer you an "adjusted close" to include the dividend effect.
