How does the Dow Jones Industrial Average (DJIA) divisor change to account for dividends?
The methodology for divisor changes is based on splits and composition changes. Dividends are ignored by the index. Side note - this is why, in my opinion, that any discussion of the Dow's change over a long term becomes meaningless. Ignoring even a 2% per year dividend has a significant impact over many decades.  The divisor can be found at http://wsj.com/mdc/public/page/2_3022-djiahourly.html Scrip dividends are similar to stock splits. With a stock split, 100 shares can turn into 200 shares; with scrip dividends they might turn into 105 shares.
"In a cap-weighted fund, the fund itself isn't buying or selling at all (except to support redemptions or purchases of the fund). As the value of a stock in the index goes up, then its value in the fund goes up naturally. This is the advantage of a cap-weighted fund, that it doesn't have to trade (buy and sell), it just sits on the stocks. That makes a cap-weighted fund inexpensive (low trading costs) and tax-efficient (doesn't trigger capital gains due to sales). The buying high and selling low referred to by ""fundamental indexation"" advocates like Wisdom Tree is buying high and selling low on the part of the investor. That is, when you purchase the market-cap-weighted fund, at that time that you purchase, you will spend more on the higher-priced stocks, just because they account for more of the value of the fund, and less money goes to the cheaper stocks which account for less of the value of the fund. In the prospectus for a fund they should tell you which index they use, and if the prospectus doesn't describe the weighting of the index, you could do a web search for the index name and find out how that index is constructed. A market-cap-weighted fund is the standard kind of weighting which is what you get if you buy the stocks in the index and then hold them without buying or selling. Most of the famous indexes (e.g. S&P500) are cap-weighted, with the notable exception of the Dow Jones Industrial Average which is ""price-weighted"" http://en.wikipedia.org/wiki/Price-weighted_index. Price-weighting is just an archaic tradition, not something one would use for a new index design today. A fund weighted by ""fundamentals"" or equal-weighted, rather than cap-weighted, is effectively doing a kind of rebalancing, selling what's gone up to buy more of what's gone down. Rather than buying an exotic fund, you could get a similar effect by buying a balanced fund (one that mixes stocks and bonds). Then when stocks go up, your fund would sell them and buy bonds, and the fund would sell the most of the highest-market-cap stocks that make up more of the index. And vice versa of course. But the fundamental-weighted funds are fine, the more important considerations include your stocks vs. bonds percentages (asset allocation) and whether you make irrational trades instead of sticking to a plan." Have you actually read the Wikipedia article? To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; which made the DJIA at first, a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components). That is: DJIA = sum(p) / d where p are the prices of the component stocks and d is the Dow Divisor. Events such as stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincide: DJIA = sum(p_old) / d_old = sum(p_new) / d_new The Dow Divisor was 0.14602128057775 on December 24, 2015.[40] Presently, every $1 change in price in a particular stock within the average, equates to a 6.848 (or 1 ÷ 0.14602128057775) point movement. Knowing the old prices, new prices (e.g. following a split), and old divisor, you can easily compute the new divisor... Edit: Also, the detailed methodology is published by SP Indices (PDF). Edit #2: For simplicity's sake, assume the DJIA is an index that contains 4 stocks, with a price of $100.00 each. One of the stocks splits 2:1, meaning the new price/share is $50.00. Plugging the numbers into the above equation, we can determine the new Dow Divisor: 400 / 4 = 350 / d => d = 3.5 "I am guessing that when you say ""FRENCH40"" and ""GERMAN30"" you are referring to the main French and German stock market indices.  The main French index is the CAC-40 with its 40 constituent companies. The main German index is the DAX, which has 30 constituents.  The US30 is presumably the Dow Jones Index which also has 30 constituents. These are stock market indices that are used to measure the value of a basket of shares (the index constituents).  As the value of the constituents change, so does the value of the index. There are various financial instruments that allow investors to profit from movements in these indices.  It is those people who invest in these instruments that profit from price movements.  The constituent companies receive no direct benefit or profit from investor trading in these instruments, nor does the government." Dividends are normally paid in cash, so don't generally affect your portfolio aside from a slight increase to 'cash'.  You get a check for them, or your broker would deposit the funds into a money-market account for you.  There is sometimes an option to re-invest dividends, See Westyfresh's answer regarding Dividend Re-Investment Plans. As Tom Au described, the dividends are set by the board of directors and announced.  Also as he indicated just before the 'record' date, a stock which pays dividends is worth slightly more (reflecting the value of the dividend that will be paid to anyone holding the stock on the record date) and goes down by the dividend amount immediately after that date (since you'd now have to hold the stock till the next record date to get a dividend)  In general unless there's a big change in the landscape (such as in late 2008) most companies pay out about the same dividend each time, and changes to this are sometimes seen by some as 'indicators' of company health and such news can result in movement in the stock price. When you look at a basic quote on a ticker symbol there is usually a line for Div/yeild which gives the amount of dividend paid per share, and the relative yeild (as a percentage of the stock price).  If a company has been paying dividends, this field will have values in it, if a company does not pay a dividend it will be blank or say NA (depending on where you get the quote).  This is the easiest way to see if a company pays a dividend or not.  for example if you look at this quote for Google, you can see it pays no dividend  Now, in terms of telling when and how much of a dividend has been paid, most financial sites have the option when viewing a stock chart to show the dividend payments.  If you expand the chart to show at least a year, you can see when and how much was paid in terms of dividends.  For example you can see from this chart that MSFT pays dividends once a quarter, and used to pay out 13 cents, but recently changed to 16 cents.   if you were to float your mouse over one of those icons it would also give the date the dividend was paid. The same as you would for an individual stock. A stock starts the year at $100, and has $4 in dividends over the year, why would the fact the the stock ends the year at say $90, confuse you?  You pay tax on the dividend at the favored rate, if held in a taxable account, obviously, and that's about it. The yield on Div Data is showing 20% ((3.77/Current Price)*100)) because that only accounts for last years dividend. If you look at the left column, the 52 week dividend yield is the same as google(1.6%). This is calculated taking an average of n number of years. The data is slightly off as one of those sites would have used an extra year. "The short answer is the annualised volatility over twenty years should be pretty much the same as the annualised volatility over five years. For independent, identically distributed returns the volatility scales proportionally. So for any number of monthly returns T, setting the annualization factor m = 12 annualises the volatility.  It should be the same for all time scales.  However, note the discussion here: https://quant.stackexchange.com/a/7496/7178 Scaling volatility [like this] only is mathematically correct when the   underlying price model is driven by Geometric Brownian motion which   implies that prices are log normally distributed and returns are   normally distributed. Particularly the comment: ""its a well known fact that volatility is overestimated when scaled over long periods of time without a change of model to estimate such ""long-term"" volatility."" Now, a demonstration.  I have modelled 12,000 monthly returns with mean = 3% and standard deviation = 2, so the annualised volatility should be Sqrt(12) * 2 = 6.9282.   Calculating annualised volatility for return sequences of various lengths (3, 6, 12, 60 months etc.) reveals an inaccuracy for shorter sequences.  The five-year sequence average got closest to the theoretically expected figure (6.9282), and, as the commenter noted ""volatility is [slightly] overestimated when scaled over long periods of time"". Annualised volatility for varying return sequence lengths  Edit re. comment Reinvesting returns does not affect the volatility much.  For instance, comparing some data I have handy, the Dow Jones Industrial Average Capital Returns (CR) versus Net Returns (NR).  The return differences are somewhat smoothed, 0.1% each month, 0.25% every third month.  More erratic dividend reinvestment would increase the volatility." You simply add the dividend to the stock price when calculating its annual return. So for year one, instead of  it would be