PM Images Dividend investing is different now. Most stocks don't yield more than T-bills. In fact, only 19 stocks in the S&P 500 yield more than 5%, at a time when the 1 year US Treasury Bill yields 5.
14%. Expand that out to the full Russell 3000 index, and only 103 stocks (about 4% of them since that index of "3000" only has 2676 stocks currently) yield at least 5%. Of course, there's zero growth potential in T-bills, and stock have all kinds of growth potential.
However, it has been a long time since that growth potential was realized. The chart below tells this simple story. It is a story that many investors either don't realize or are intentionally ignoring.
Over the past three years, the S&P 500 has gained 34% in total, right in line with the 10% a year some newer investors assume will be their right to earn all the time. History vehemently disagrees with that. Add in another 500 stocks and the Russell 1000 earned just slightly less, signifying that the larger stocks carried the load over this time.
in particular, the blue line shows that an ETF with only 10 stocks, the 'Magnificent 7' plus three more, really created the "lift" in the S&P 500, as that basket gained about 20% a year, 62% in total. But look below all of that high-fiving by the S&P 500 investors, which is what so many have become. Whether it is through workplace investment plans, buying S&P 500 index mutual fund or ETFs, that index is the toast of the town.
That's been the case, with ever-rising popularity,.
