TL;DR
S&P 500 dividend yields have declined steadily since the 1970s as buybacks replaced dividends and growth-oriented firms came to dominate the index. The total shareholder return (dividends + buybacks) is closer to the historical norm.
In short
Dividend-focused investors should look at total shareholder yield (dividends + net buybacks) rather than dividend yield alone. By that measure, the S&P 500 is paying out close to its historical norm. The mechanism shifted; the cash returned is broadly similar.
We're working on a full deep-dive for this article — including historical data, charts, and worked examples. In the meantime, you can run a free simulation to explore the underlying numbers yourself.
Frequently asked questions
- Why did dividends fall as a percentage of earnings?
- Tax changes (especially the 2003 dividend tax cut) and the rise of buybacks as a tax-efficient alternative. Mechanically, buybacks let companies return cash while being indifferent to shareholder tax brackets.
- Are dividends 'real' returns or just retained earnings paid out?
- They're real cash returns, but mechanistically they reduce the share price by the dividend amount. Reinvested dividends and price growth together are total return.
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