As of August 7th, the estimated 12-month dividend yield of the S&P 500 had fallen to approximately 1.04%, a further decline from 1.15% at the end of 2025, entering the extreme range seen during the dot-com bubble. FactSet data shows that the S&P 500 dividend yield briefly dipped below 1% during the peak of the dot-com bubble in 2000.
More importantly, this is not because US companies have suddenly stopped paying dividends. S&P DJI predicts that total cash dividends paid by S&P 500 companies will still exceed $700 billion in 2026, remaining at a historically high level; meanwhile, US corporate share buybacks have reached an annualized scale of trillions of dollars. The decline in dividend yield is mainly due to the fact that stock price increases have far outpaced dividend growth, coupled with the continued increase in the weighting of large technology companies with low dividend yields, and companies increasingly returning capital through share buybacks rather than cash dividends.
In short, the "cash yield cushion" for US stocks is very thin, and current valuations increasingly rely on future earnings growth and capital gains, rather than cash returns during the holding period. It shares similarities with 2000, but cannot be used as a sole indicator of a bubble peak; especially after buybacks have become an important way to return shares to shareholders, comparing only dividend yields will systematically underestimate the true shareholder returns of modern US stocks.
