The S&P 500 yield has dropped to roughly 1.15%, sinking toward levels last seen near the early‑2000s dot‑com crash, according to Trivariate Research.
Adam Parker, the firm’s founder, said the only time it went lower was when it touched 1.09% during that bubble.
Adam said dividend investors “haven’t had much to cheer about these days,” because megacap tech companies now dominate the index and barely return any cash to shareholders.
Information technology stocks hold 35% of the entire S&P 500, and those giants have become the main force dragging the yield down.
Adam noted that 56% of companies in the index pay a dividend, which he said is “not meaningfully different from the last 25 years.” He added that the problem is simple: “It is clearly the largest companies by market cap having low or no dividends that are driving this current regime.”
He pointed to Nvidia, which yields 0.02%, Microsoft, which yields 0.76%, and Alphabet, which yields 0.29%, as examples of how the biggest winners are also the weakest when it comes to dividends.
Adam said these low‑payers helped push the S&P 500 to new highs this year on the back of AI enthusiasm, even though the group has seen some rough trading lately.
Tech selloff hits dividend names as market struggles
Tech names have been dealing with concerns about valuations and the Federal Reserve’s monetary path. The broader market bounced on Friday after a heavy selloff on Thursday, but the session stayed fragile.
Nvidia, which reported what Adam called “blockbuster earnings,” ended Thursday in the red and closed slightly lower Friday. The stock is still up 33% this year but down 12% this month. Adam added that dividend‑paying stocks are now in their third‑worst stretch in 25 years, because money keeps flowing to companies that barely offer dividends.
He said that traditionally defensive high‑yield sectors like consumer staples, telecom, and pharma have been weak. Investors have been chasing tech until the recent pullback. Even with the pressure, Adam said the dividend landscape still has pockets of strength, especially among companies raising their payouts.
He explained that since Covid, firms that increased dividends have slightly outperformed their industry groups, with the strongest results showing up in real estate, utilities, and energy.
Adam highlighted companies that boosted their dividend while staying in the lowest payout ratio bracket, below 16.2%, saying those firms outperformed their peers over the following two years.
Companies boost payouts as analysts track future upside
Adam assembled a list of long ideas centered on firms that recently raised dividends and sit in that bottom payout quintile. One of them is Cinemark Holdings, which lifted its quarterly dividend by 12.5% earlier this month.
The change becomes effective December 12 for shareholders on record as of November 28. Cinemark now yields 1.24%. The company posted a revenue beat for its third quarter but missed earnings expectations. It also said it retired its pandemic‑related debt.
Alongside the dividend increase, Cinemark announced a $300 million share buyback. FactSet data shows the stock carries an overweight rating with roughly 16% upside, even though it is down 5% this year.
Another name on Adam’s list is Capital One Financial, which raised its quarterly dividend from 60 cents to 80 cents, a more than 30% bump, payable December 1 for holders on record on November 17. It now yields 1.58%.
Capital One reported $4.83 in third‑quarter earnings per share, topping the $4.38 expected by analysts. The stock is up 17% year to date and holds an overweight rating with 26% expected upside.
The final name is Cheniere Energy, which raised its quarterly dividend from 50 cents to 55 cents, giving it a 1.07% yield. Cheniere carries a buy rating with an estimated 32% upside. The stock is down more than 4% this year.
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