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The S&P 500: A Dividend Yield & Growth Overview

There is arguably no benchmark more prolific than the S&P 500, which is regarded as one of the best single gauges of large cap U.S. equities. Standard & Poor’s debuted its first equity index in 1923, although the S&P 500 as we know it today didn’t hit the street until 1957.

Of the 500 constituents, more than 400 companies in the S&P 500 are dividend payers. Not all of the components, however, offer stellar yields or consecutive dividend increases. Below is a dividend-focused analysis of the entire S&P 500, focusing on summarizing the index in six charts. (Note: the data below was compiled by S&P Dow Jones Indices, as of November, 2014).

S&P 500 Dividend Yield

For dividend investors, an attractive yield is a must. The majority of the companies in the S&P 500 index feature a yield between 1% and 2%. Currently, there are just under 40 companies that yield more than 4%. The chart below breaks down the S&P 500 components according to yield. Click here for more information on dividend yield.

Dividend Activity Through the Years

Every year, a significant number of companies within the S&P 500 increase dividend payouts; only a small handful, however, decrease dividends. Since the 2008 financial crisis, investors have seen more and more S&P 500 companies hike payouts. Below is a chart depicting the number of companies increasing and decreasing dividends by year:

Consecutive Dividend Increases

There are also many S&P 500 companies that have raised dividends consecutively for a number of years. Often, investors check to see the number of years a company has consecutively raised dividends in order to determine dividend reliability.

There are only a handful of companies in the S&P 500 that have raised dividends for over 50 years; the vast majority of constituents, however, have only increased dividends consecutively from one to four years. Below we highlight the dividend “Aristocrats” of the S&P 500.

The Dividend-Paying Industries of the S&P 500

The S&P 500 captures approximately 80% coverage of available market capitalization, spanning across a wide array of industries and sub-sectors. Below is an overview of the average dividend yields featured in the main S&P 500 industries.

The S&P 500′s Highest and Lowest Yielders

The S&P 500′s average dividend yield is approximately 2.00%. Based on data as of November, 2014, there are more than 200 companies that feature yields well above that average. Below we highlight the top five highest and lowest dividend yields from the S&P 500.

The Bottom Line

Within the S&P 500, investors can find a handful of stocks that offer attractive yields as well as consecutive dividend increases. Not all of the components, however, feature these characteristics. Investors seeking an ETF alternative that tracks this benchmark should consider SPY or VOO.