What's the yield of the Dow? Eh. It's a "market yield" because that's what the Dow, more or less is. But it's a synthesized, much smaller view of the market than, say, the S&P 500.
Why? The Dow comprises only 30 stocks. And those tend to be bigger, slower, higher dividend payers. So in an era when the S&P 500 might be paying 2.5% in dividend yield, the Dow might pay more like 3%.
Why does it matter? Well, there have been eras where dividends received more favorable tax treatment and/or dividends were perceived as comprising a very large part of the value in investing in equities. The world changed. Like it always does. And today, or at least in the modern era, investors believe in long-term growth or capital appreciation, and are less focused on the divvy.
Why? Well, in part, because companies didn't raise their dividends as fast as their stock prices grew, so the amount of dividend paid relative to stock prices remains at historic lows.
Our bet: the world will keep changing. Don't ignore your dividends.
Related or Semi-related Video
Finance: What is the Dow Jones Industria...2710 Views
finance a la shmoop- what is the Dow Jones Industrial Average? well it's just
an index. it's a basket of 30 industrial stocks hence the catchy industrial word [list of the 30 stocks involved in the Dow]
in there and it was started in 1896 by Charles Dow and Edward Jones sort of the
Coke and Pepsi of stock averages in the day .worth noting is the fact that while
the Dow average is quoted often in the press it's not something that real Wall
Street traders really rely on that much as a market place holder anymore. why?
well because the Dow comprises only 30 stocks. it isn't really a broad market [Dow Jones in the trash]
representation, and you know the way the S&P 500 is the 500 is bigger than 30. Big
Brother has way more stocks and is thus way more liquid than the relatively
blippi set of 30 stocks that the Dow offers. over time the Dow has changed as
companies were bought and/or died and or just withered and became no longer
relevant. i.e. newspaper industry. which means that this thing has gone through
more faces than Kanye West .yeah. [Kanye West faces pictured]
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