"Closing price 12/31/1998 was $40.31 a share. The point is that anyone owning the stock at that point and time could have sold it for that price"
That is correct, within reason.
"So all those long term investors who owned the stock at that point in time have just basically made the dividend as their total return in the last seven years."
Okay, that works.
"Which is less than a 3% total annual return for the last seven years. Not a great investment for anyone."
You don't have enough information to know my return. To calculate that, you would need my cost basis which is not even in the same area code as $40.31.
The expected come back is "well you could have sold and bought another security that has appreciated." That is true as well. The problem is, my crystal ball is rather cloudy. When looking ahead in 1998 to say today, I had to weigh expected return. One key piece of data was the then current dividend. Based on my cost basis, a lowball estimate of expected return for just the dividend was 9%.
Can anyone look around today [because hindsight is 20/20] and tell me of a security I could buy today and receive a 9% yield that is virtually guaranteed WITH the 'possibility' of market appreciation? The harder question is can anyone tell me were to get a guaranteed 20+% because with the dividend increases, that's what I'm receiving on my initial investment on a yearly basis.