Over time, the aggregate gains made by shareholders must of necessity match the business gains of the company.

How often investors lose sight of that eternal principle!
Yet the record is clear. History, if only we would take the
trouble to look at it, reveals the remarkable, if essential,
linkage between the cumulative long-term returns earned by
business—the annual dividend yield plus the annual rate of
earnings growth—and the cumulative returns earned by the
U.S. stock market. Think about that certainty for a moment. Can you see that it is simple common sense?
Need proof? Just look at the record since the twentieth century began (Exhibit 2.1). The average annual total
return on stocks was 9.6 percent, virtually identical to the
investment return of 9.5 percent—4.5 percent from dividend yield and 5 percent from earnings growth. That tiny
difference of 0.1 percent per year arose from what I call
speculative return. Depending on how one looks at it, it is
merely statistical noise, or perhaps it reflects a generally
upward long-term trend in stock valuations, a willingness
of investors to pay higher prices for each dollar of earnings at the end of the period than at the beginning.
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