Timeline for Why is the dividend yield on the S&P 500 so low?
Current License: CC BY-SA 4.0
11 events
| when toggle format | what | by | license | comment | |
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| Dec 12, 2023 at 16:50 | comment | added | JimmyJames | This is a fairly decent answer, but the tax implications of dividends aren't really important to the average investor. The tax implications of dividends to high-income individuals are very significant. Company governance is not a one-person, one-vote situation, it's one stock, one vote (or often 1 stock: 0 votes, for certain classes of stock.) Wealthy people who would pay high tax rates on dividends tend to hold a lot more stock than everyone else and therefore have more control over whether stocks pay dividends. | |
| Dec 12, 2023 at 16:39 | comment | added | Mark Dominus | Chuu's point here is important, and although this answer circled around it, it did not state it explicitly: Dividends are cash payments that are taxed as income. Stock buybacks result in unrealized capital gains, which are taxed only when realized, if at all. Investors prefer to pay taxes later rather than sooner. | |
| Dec 11, 2023 at 21:06 | comment | added | D Stanley | Not sure I agree that this is the only, definitive reason. Certainly there are other correlated factors, such as the growth of tech companies in the S&P that typically pay less dividends (focusing on growth), and the rise in share of retirement plans that do not benefit from dividend tax treatment. | |
| Dec 11, 2023 at 17:30 | comment | added | Barmar | @Chuu Yes, but the second bullet doesn't say anything about taxes. It talks about the work of making the purchase and the transaction fees (which DRPs don't normally charge). | |
| Dec 11, 2023 at 17:04 | comment | added | Chuu | @Barmar The tax consequences of a dividend being reinvested are the same as if you took the dividend and bought the stock. | |
| Dec 11, 2023 at 16:23 | comment | added | Barmar | #2 is usually solved with dividend reinvestment plans. Many (most?) dividend-paying companies provide this option. | |
| Dec 11, 2023 at 13:53 | history | edited | Fadeway | CC BY-SA 4.0 |
grammar and sentence structure improvements
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| Dec 11, 2023 at 12:59 | comment | added | Tomek Tarczynski | Perfect! Buybacks were the piece that I was missing. Companies have switched heavily to buyback instead of dividends. SInce around 2004, companies are spending more on buybacks than dividends. Source: prnewswire.com/news-releases/… | |
| Dec 11, 2023 at 12:57 | vote | accept | Tomek Tarczynski | ||
| S Dec 11, 2023 at 12:29 | review | First answers | |||
| Dec 11, 2023 at 13:10 | |||||
| S Dec 11, 2023 at 12:29 | history | answered | Fadeway | CC BY-SA 4.0 |