Decades ago, one of my colleagues made a presentation at a financial conference on the importance of dividends. As he left the podium, he was confronted by a college professor who declared, “I just don’t believe in dividends.”

But dividends are real, they don’t require faith — they simply “are.” Rather than approach the topic in an analytical fashion, the professor seemed to react to investing as though it were a religion. Which is precisely the opposite of what we seek to do.

Investing successfully requires a kind of agnostic thought process. We must be indifferent to emotion and volatility. Undogmatic, dispassionate, concerned only with the facts.

The question is not whether we believe in dividends, the question is what they tell us. Blind bias adds little to total return. We must contend with the world and stock market we are given. It is there we will find value. It is there we collect dividends, whether we believe in them or not.

Don Kilbride, the manager of the Vanguard Dividend Growth fund, remarked toBarron’s in November of 2013, “Ninety percent of what we do is opinion — value, quality, estimates. But two (factors) are not debatable: Price and dividend. I focus as much as I can on fact.”

I have written in the past of the importance of dividends as a stock selection input, but they also contribute significantly to total return. Last year, the price return of the S&P 500 was a negative 0.7 percent, but when the dividend return was added in, the total return for the S&P was 1.4 percent. Over time, the contribution of dividends to total return compounds significantly.

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