Andrew Bary
Yield is rapidly disappearing from the S&P 500 index as tech stocks whose payouts are tiny relative to their prices make up a record share of the benchmark.
As of the close of trading on Monday, the dividend yield on the S&P 500 stood at 1.18%, based on the payments made over the past 12 months. The index closed about 6000 for the first time and hit a closing record.
That is the lowest since the yield hit 1.17% on Feb. 12, 2001. Tech stocks accounted for a big chunk of the index back then as well.
The highest yield for the index since 2001 was 4.1% in March 2009, as stocks hit their low point during the 2008-2009 financial crisis.
Technology stocks led by Nvidia, Apple and Microsoft made up 32% of the S&P 500 index Monday, more than twice the share of financials, the second-place group, at 14%.
Three tech stocks that account for 20% of the index all pay paltry dividends. Nvidia yields 0.03%; Apple, 0.5%; and Microsoft, 0.8%.
Other tech-oriented giants, such as Amazon.com, Alphabet, and Meta Platforms aren't classified as tech stocks. But they too have little to no yields; Amazon.com doesn't carry a dividend. Two other top 10 stocks in the S&P 500 index, Tesla and Berkshire Hathaway, also have no dividends.
The upshot is that there is no meaningful yield for investors to reinvest, providing so-called dividend support for the index.
The situation isn't much different in mid-cap stocks. The S&P MidCap 400 index yields 1.4%
The yield gap between the S&P 500 and badly lagging foreign stocks is wide. The iShares Core MSCI EAFE exchange-traded fund, which tracks an overseas benchmark, yields 2.6%.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 12, 2024 15:59 ET (20:59 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments