There are many reasons to invest in dividend-paying stocks. One of reasons is that dividends form the largest portion of the total return on an investment. This is especially true when stocks are held for the long-term. The following chart shows that
the contribution to total return for each of the components of equity returns for the period 1802 to 2002. The total annualized return for the period of 7.9% consisted of a 5% return from dividends, a 1.4% return from inflation, a 0.6% return from rising valuation levels, and a 0.8% return from real growth in dividends.