Image Source: PixabayWhile plenty of large-cap companies have dividend yields above 3%, the US market as a whole has a relatively low dividend yield of just 1.29%. Below is a chart showing SPY’s dividend yield at the end of each quarter since it began trading in 1993. As you can see, SPY’s average yield over this entire time frame has been 1.82%, and its current yield is at the very low end of its 30-year range.
A dividend yield of less than 2% may not seem like much, but those payouts really add up and compound over time. In fact, nearly half of the US stock market’s total return since 1993 has come from collecting its quarterly dividend and re-investing that cash right back into SPY.
Below is a snapshot of a page from our “Get Invested!” slide-deck that we published last year for clients. It includes a chart of SPY’s simple share-price change since inception versus its total return (dividends re-invested) since inception. Through late March of this year when we last updated this slide-deck, SPY’s price change since inception was 1,063%, while its total return was nearly double that at 1,959%. The 896-percentage point difference between SPY’s simple share-price change and its total return is all a result of re-investing those quarterly dividends paid out by SPY.
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