Dividend Yields Hit 12 Year High

Last week’s market correction has lowered stock prices to the point where dividend yields are now at their highest levels in 12 years.

dividend yield
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Leading S&P 500 components such as Pfizer (PFE), AT&T (T), Dow Chemical (DOW), Nucor (NUE), and Duke Energy (DUK) all ended the week with forward looking dividend yields of over 6.5% and well above their 5 year averages.  See larger version of chart.

According to an analyis released by the Federal Reserve over the weekend, the Dividend-Price ratio of the S&P 500 finished the week of October 3 at 2.75%  We estimate that after the declines of the week of October 10, the ratio climbed to 3.43%, well above the 1996 level of 2.3%.

federal reserve board dividend yield
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The Health Care Select Sector SPDR Fund (XLV) has 9% of the ETF in Pfizer as well as a 14.6% stake in Johnson & Johnson  which finished the week with a 3.4% forward dividend yield.

The Dow Jones U.S. Telecommunications Sector Index Fund (IYZ) is heavily concentrated in AT&T with a 24% stake.  18% of the fund is also in Verizonwhich had a 6.9% forward yield as of Oct. 10.

Dow Chemical is heavily owned by the PowerShares FTSE RAFI Basic Materials Sector Portfolio(PRFM) which has a 16% stake in the company.

The Market Vectors Steel ETF (SLX) has nearly a 6% stake in Nucor while the Vanguard Utilities ETF(VPU) has Duke Energy as its number six holding.

See the ETF Directory for a complete listing of Dividend ETFs.