Long Term Returns

The following calculator compares the cumulative returns by asset class and against inflation for Australia. The latest data date is .

Comparative cumulative returns

The raw equity return data, the ASX All Ordinaries, only captures the capital return and excludes the dividend yield. A long term total return index is not available, but the dividend yield can be captured by adjusting slider above. The average dividend yield of Australian stocks since 2005, the default value of 4.4% represents the average annual yield observed over the last 20 years. Similar the residential property price index captures the capital return and excludes the rental yield. A long term total return index for residential property is not available, but the rental yield can be caputre by adjusting the slider above. The default value of 2.5% is the average annual return since 1990 as implied by household income and balance sheet of the National Accounts.

Data sources

• Inflation: a 70 year history of inflation Australian Bureau of Statistics.
• Equity: Australian long term returns on equities Reserve Bank of Australia, Research Discussion Paper 2019/04
• House Prices: Trends and Cycles in Sydney and Melbourne House Prices from 1880 to 2011 Australian Economic History Review, 2012, vol. 52, issue 3, 293-317
• Government Bonds: Australian Government 10 year bond, Yields on Australian government bonds, interpolated, 10 years maturity, Reserve Bank Statistical Table F02.
• Gold Price History: Macrotrends.

Dividend Yields on Equity Holdings

A comparison of ASX 200 index with the accumulation index and implied annual dividend yield.

The implied dividend yield is the difference between the change in the capital index (s) and the accumulation or total return index (a) over a time span (p):

The yield is expressed as a per annum rate as:

There is quite a significant difference between the accumulation index (including dividends), in fact over the last 20 years the accumulation index has grown almost 5 fold, while the capital index has only doubled.

The accumulation index is calculated by reinvesting all dividends at the ex-dividend date, it does not make adjustments for income tax which some investors are incur on dividends.

The implied dividend yield has been very stable over the last 20 years, although note that dividends can't be less than zero. The lowest dividend yields were recorded over the pandemic (2021) and dividends were also low during the 2008 global financial crisis and in 2010. In 2024 with interest rates higher, and consumer spending slowing down there has been another slow down in dividends.

The Australian dividend yield is significantly higher than United States. This reflects the higher proportion of capital growth stocks in the United States and the benefits of imputation credits in Australia.

Despite the differences in levels, there is a strong correlation in the trend dividend rates.

Another significant difference between Australia and the United States is evident when the return span is 3 months, in which the implied dividend yield for Australia has a very apparent see sawing, while the US dividend yield is quite stable. This difference reflects the fact that Australian listed companies predominantly pay semi-annual dividends in July and January, while US companies more commonly pay quarterly dividends.

Rental Yields on Property Holdings

A long term measure of returns through rents for ownership of property is available from the National Accounts by comparing:

• from the Household Income Account: the gross operating surplus from ownership of dwellings;
• from the Household Balance Sheet: non-financial, produced fixed assets: dwellings plus non-financial, non-produced fixed assets: land;

The series below compares the ratio since 1990.