Does the S&P 500 index include dividends?


The S&P 500 index and includes dividends. As of December 2017, the dividend yield for the S&P 500 index was 1.85%. This is below the historical average level of 4.41% and close to a record low of 1.11% in August 2000. A record yield dividends in 1932, at 13.8%.

In the first half of the 20th century, dividends usually grow at the same pace as in the stock market. This relationship has changed drastically in the 1960-ies, the stock market decline does not necessarily translate into increasing dividends at the same rate. In the bull market of the 1980-ies, these relations are then dispersed when the dividend yield fell sharply as dividends remained the overall market rose.

The reasons for the low yield dividend

Part of the reason for this change in relation to dividends reducing inflationary pressure and lower interest rates, reducing pressure on corporations to compete with the risk-free rate of return.

Low interest rates even make low attractive dividends and high interest rates can make even higher dividends unattractive. For example, in 1982, the dividend was 6% for the S&P 500, but the interest rate on 10-year Treasury was above 15%. In contrast, as of December 2017, the dividend yield for the s&P 500 was 1.85% and the yield on 10-year Treasury was 2.40%.

There is much more demand for dividend stocks in this type of environment. One of the results of the policy of the Central Bank in expanding the money supply via low interest rates and quantitative easing makes stocks more attractive dividends. Dividends on less time, since many companies elect to return cash to shareholders in the form of share buybacks, not dividends, as this technique use a more favorable tax regime.

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