Part of my kids' college fund is invested in Vanguard's S&P 500 Index Fund (VFINX). When I opened the October statement, I was mildly surprised to see the net asset value had fell below the September 1997 level when the account was first opened. Over the year I have become somewhat disenchanted with mutual funds, ETFs and CEFs due to their recent poor performance relative to my dividend investments.

So what would have happened if I had invested my kids' college fund following a dividend investing strategy? It is difficult to say exactly, but I can make some assumptions and see where it takes me.

Ground Rules
For simplicity, I will select five dividend stocks and purchase $1,000 in each and put $5,000 in VFINX using the closing price on September 30, 1997. Dividends will be held and reinvested on the last day of the year at the closing price. I will ignore commissions and taxes. Final valuation date is as of the end of November 2008, except for BAC (see below). Information was pulled from Yahoo Finance.

Stock Selection
This obviously is the most difficult portion and requires the most self-honesty. I will try to reason what stocks I would have purchased in 1997 without looking at their performance. Since it was for my kids' education, I will intentionally avoided the more risky stocks, including REITs. Here are the five stocks I selected and my thoughts as to why:

• Johnson & Johnson (JNJ): For me the selection of JNJ and PG were no brainers. JNJ and PG are two stocks that have been cornerstones in virtually every dividend portfolio for decades.
• Procter & Gamble Co. (PG): See above.
• The Coca-Cola Company (KO): This was a little more difficult form an honesty stand-point. Without looking I suspect that Pepsi (PEP) out-performed KO during this period, but I owned KO in the past and would have likely chosen it over PEP.
• Bank of America (BAC): Knowing that BAC cut its dividend, it was another difficult selection from an honesty perspective. Knowing what I know now, I would have selected BB&T (BBT), but BAC was the first bank I purchased, so I will go with it.