Course 306: Dividend Yield
The Tale of Shrinking Dividend Yields
In this course
1 Introduction
2 Dividend Yield Measures Dividends
3 Who Has High Dividend Yields--And Who Doesn't
4 The Tale of Shrinking Dividend Yields
5 High Dividends = Good Defense

 

As of January 2000, the dividend yield of the S&P 500 stood at an all-time low of 1.14%. A little more than a decade ago, it was 4%. Why the drop? 

Stock prices have risen to the skies, but dividends have lagged behind as companies have found other uses for their extra cash. Many companies prefer to plow money into expansion, acquisitions, or share buybacks. That's fine with many investors, because dividends aren't tax-friendly: They count as ordinary income and are thus taxed at up to twice the rate of capital gains. 

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