Dividends delivered 52% of FTSE 100 total returns over last decade

March 14, 2026

Dividends accounted for 52%** of the total return of the FTSE 100 over the last ten years shows a study by Bowmore Asset Management, highlighting the critical and often overlooked role income plays in long-term equity performance.

Bowmore says that whilst income investing fell out of favour as growth investing and tech companies dramatically outperformed, investors are now leaning towards income investing. That’s partly because valuations on growth shares have become too stretched.

Bowmore, says that the importance of dividends as a component of total returns is not limited to the UK. 56% of the Asia Pacific region’s total equity returns also came from dividends over the twenty years to November 2025***.

James Woodman, Investment Director at Bowmore Asset Management says: “The multiples on many growth stocks no longer look attractive which is why investors are looking at higher yielding shares.”

“Growth shares have taken a hit recently and are at risk of larger correction. At the same time corporate governance reforms globally continue to drive dividend growth.”

The recent sharp declines in SaaS (software-as-a-service) stocks illustrate the risks facing highly valued growth sectors.

Dividends reflect ‘disciplined capital allocation’

The dividends data challenges the common misconception that dividend-paying companies lack growth prospects. James Woodman insists that dividends can reflect disciplined capital allocation and strong cash generation.

Equity income investing focuses on generating returns through steady cash flow rather than relying solely on share price gains. This approach tends to favour sectors with healthy and resilient cash flows, including utilities, consumer staples, financials and energy.

James Woodman adds: “Dividends are not a sign that a company has run out of ideas. They are a sign of financial strength and rational capital allocation. Returning excess cash to shareholders allows investors to redeploy it into new opportunities rather than leaving it tied up in projects that may not generate attractive returns.”

FTSE 100 total return with dividends vs without dividends