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It is a good point - first time I ran the numbers I realized I was missing them, but now my numbers use the "adjusted close" from yahoo which take dividends into account. As of today, my all-time APY would be 6.02% - lower if you take inflation into account. And it's worth noting that almost all of the time before now would have had a lower APY than that.

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Using the adjusted close assumes that you put your dividend receipts into a mattress so it's still slightly low, but I doubt that's more than .1% or .2% for a typical portfolio over a moderate timeframe.

I wholeheartedly agree with you that it's dangerous to bet your retirement on a level of return that many won't achieve.

Actually, can you explain that more? Since yahoo adjusted close says it takes dividends into account, I took that to be the same as immediately reinvesting your dividends in the same holding. You're saying that instead, it's the same as issuing the dividends as cash and then forgetting about it?

If so, then how do people actually backtest long term holdings to assume reinvested dividends? As far as free historical data sources, I thought it was basically yahoo or nothing.

I was wrong. I thought Yahoo adjusted for dividends incompletely but they appear to handle them fully.

My apologies for the confusion.

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