What Is The Average Dividend Yield of the Stock Market?by Geri Terzo
With the support of its board of directors, a company can increase its dividend payment at any time.
A dividend yield illustrates an investment's returns relative to the size of dividend payments and stock price. An increasing dividend yield can mean that a company's dividend payout is rising -- or that the stock price is declining. The higher the dividend yield, the greater the possibility that a stock price is undervalued, or not reflecting its true worth. Some investors use dividend yield to locate investment opportunities in the stock market. Dividends and stock prices change, however, and as a result,
dividend yield does not remain the same forever.
The S&P 500 is an index that reflects trading in 500 of the stock market's largest companies, and as a result is often used as a gauge for the broad stock market's performance. In just under six decades leading up to 2013, the average dividend yield was 3.26 percent, according to a 2012 Forbes article. During this time, the dividend yield for stocks was approximately twice the yield for government Treasury bonds. From September 2011 through June 2012, the average S&P 500 dividend yield was 2.38 percent, which was still higher than the average yield on 10-year Treasury bonds.
Dow Jones Industrial AverageSource: finance.zacks.com