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 S&P 500?45 Views
finance a la shmoop. what is the S&P 500? well the S&P 500 is just an index- that
is the standard and poors company assembled 500 stocks put them on a
spreadsheet- this was a spreadsheet in 1957 -and they tracked them. [spreadsheet pictured]
well the index had something like 37 shares of Procter & Gamble, the 23 shares
of Ford, 18 shares of IBM and so on. in the 1950s the S&P 500 totaled something
like 40 maybe 50 bucks on a good day. at the end of each day the elves who worked
inside of the S&P Factory, they would add up the shares basically ignore any
dividends and send to the press a total which was published to more or less
everyone who cared about investing. well not nearly even a century later the 40 [man reads newspaper]
to $50 reign to the SNP is today knock on the door of 2,500 .so without even
having dividends reinvested you'd have made 50 times your money with dividends
reinvested to buy more shares instead of keeping the cash to buy you know
groceries or electric massage slippers. you'd have made over 70 times your [grocery display case and slippers pictured]
original investment. welcome to America.
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