Stock Dividends: Learning From History

Note: The latest Standard & Poor's earnings spreadsheet (June 30) puts the annualized dividend yield at 1.84% and the indicated rate at 2.00% (The indicated dividend is the estimate for the next four quarters, based on what was paid in the most recent period). The bottom of the 1982 bear market was a major turning point for stock dividends. For more than a century, the market's dividend yield had averaged nearly 5%. But since 1982 the yield has been virtually cut in half, falling as low as 1.1% in 2000 (first chart). A long-term comparison of the annualized rate of real growth for price and dividends also highlights the difference (second chart). Click for a larger image Click for a larger image What happened? Investors shifted their focus from income streams to price appreciation, and the market was only too happy to accommodate. As a first-wave Baby Boomer, I see... Read more