Hi Clive, Re: LT history of Dividends vs Stock Prices......
The relative "smoothness" of the Dividend line attracted my attention as a possible better indicator than P/E or "Earnings Yield" in the first place and your graphs show this nicely. While recessions can hurt quarterly earnings, as you mentioned, companies are somewhat reluctant to cut dividends in the short term.
A flattening of the dividends is more likely in many recessions than a wide spread reduction.
Tax law changed in more recent years in the U.S. to give some more favorable treatment to dividend income from corporations. While yield on corporate debt is still taxable at full "personal income" rates, corporate dividends are currently taxed at about 1/2 the personal tax rate. This is because the corporation pays tax on its earnings before distribution of dividends. (one would think that would be enough taxation, but I digress) So, we citizens get a break now on corporate dividend income.
That probably won't last with the current administration.
However, in the mean time, we're now seeing more companies start to pay a dividend that hadn't been before. You are right, in Total Return for the investor, it probably doesn't matter. It only matters when there's double taxation involved.
Best regards, Tom