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S&P 500 Dividend Yield Hits 50-Year Low as Mega-Cap Tech Dominance Squeezes Income Investors
The S&P 500’s dividend yield has fallen to just 1.15% — its lowest level in half a century and only marginally above the 1.09% trough hit during the peak of the dot-com bubble, according to a new analysis from Trivariate Research founder Adam Parker.
The primary culprit? The outsized influence of mega-cap technology giants that pay little or nothing in dividends yet now represent roughly 35% of the entire index. Names like Nvidia (0.02% yield), Microsoft (0.76%), and Alphabet (0.29%) have powered the market to repeated record highs this year on AI enthusiasm, dragging the overall index yield down with them even as the percentage of S&P 500 companies paying a dividend (currently 56%) remains in line with the past quarter-century.
Parker notes that dividend-paying stocks are enduring one of their worst relative stretches in 25 years, with traditional high-yield defensive sectors — consumer staples, telecoms, and pharmaceuticals — significantly underperforming the low- or no-yield growth leaders.
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Despite the challenging backdrop, Parker sees opportunity in companies that are actively raising dividends from already-conservative payout ratios. Historically, firms that increase dividends when their payout ratio is in the lowest quintile (below ~16%) have outperformed their sector peers over the subsequent two years, with the strongest results in real estate, utilities, and energy.
Three of Parker’s current long ideas that fit this profile:
Cinemark Holdings (CNK) – Recently hiked its quarterly dividend 12.5% (new yield ~1.24%), retired all pandemic-era debt, and authorized a $300 million share buyback. Analysts rate it Overweight with ~16% upside to target price.
Capital One Financial (COF) – Boosted its quarterly dividend by more than 33% to $0.80 (new yield ~1.58%). Q3 earnings easily beat estimates. Analysts see ~26% upside; shares are already up 17% YTD.
Cheniere Energy (LNG) – Announced a 10% dividend increase to $0.55 quarterly (yield ~1.07%). Carries a Strong Buy consensus and ~32% expected upside from current levels.
With the S&P 500 yielding less than at any time since the late 1990s tech mania, income-focused investors are being forced to look beyond the broad index toward individual names that are still committed to growing shareholder payouts — ideally from a position of financial strength rather than obligation.
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