S&P 500 Dividend Yield Nears Lowest Level Since Dot-Com Bubble, Say Wall Street Experts

(Seoul=Yonhap Infomax) Yong Wook Kwon – The dividend yield of the S&P 500 index is approaching its lowest level since the dot-com bubble, according to recent analysis.

On the 22nd (local time), Adam Parker, founder of Trivariate Research, stated in a report cited by CNBC that the current dividend yield of the S&P 500 stands at 1.15%, nearing a 50-year low.

Parker noted, “The only time the dividend yield was lower was during the dot-com bubble, when it reached 1.09%.”

He attributed the decline in dividend yield to the dominance of mega-cap technology companies within the S&P 500. These large-cap tech stocks now account for 35% of the index, and despite recent corrections, both select names such as Nvidia and the S&P 500 overall have surged amid the ongoing artificial intelligence (AI) investment boom.

Parker explained, “The proportion of companies paying dividends is 56%, which is not significantly different from the past 25 years. Therefore, the current situation is clearly driven by the dividend levels of companies with large market capitalizations.”

For example, Nvidia Corp. (NASDAQ: NVDA) has a dividend yield close to zero at 0.02%, while Microsoft Corp. (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ: GOOGL) yield just 0.76% and 0.29%, respectively.

Parker added, “As stocks that pay little or no dividends have soared, dividend-paying stocks are experiencing their third-worst period in the past 25 years.”

He further observed, “Since the COVID-19 pandemic, companies that increased dividends have tended to outperform the industry average, with dividend hikes in real estate, utilities, and energy sectors proving most effective for share price gains.”

He emphasized, “Among companies that raised their payout ratios, those in the lowest quintile (below 16.2%) outperformed the industry average over the following two years.”

ywkwon@yna.co.kr

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