Only 3.85% of S&P 500 stocks now pay a higher dividend yield than the 10-year Treasury note, the lowest share since May 2007. The index's dividend yield has sunk to roughly 1.05% against a 10-year Treasury yield near 4.74%, with rising valuations, buybacks, and the index's tilt toward tech all reinforcing the gap.
The S&P 500's dividend yield has fallen to about 1.05%, while the 10-year Treasury yield sits near 4.74%. That gap hasn't looked this lopsided since before the global financial crisis.
According to data from Ned Davis Research shared by analyst Liz Ann Sonders on August 20, only 3.85% of S&P 500 stocks now out-yield the 10-year Treasury — the lowest ratio since May 2007.
A decade-long reversal
In July 2016, 63.4% of S&P 500 stocks offered higher yields than the 10-year Treasury. Treasury yields have since normalized after the pandemic-era rate hiking cycle, while the index's average dividend yield has been stuck below 2% since 2020. For much of 2026, it has hovered near or below 1.1%.
Why dividends have shrunk
The collapse in equity dividend yields isn't entirely about companies cutting their payouts — three factors are reinforcing each other. First, valuations: as the S&P 500 has climbed, steady dividend payments now translate into smaller percentage yields. Second, buybacks: companies have increasingly favored share repurchases over dividend increases as a way to return capital. Third, index composition has shifted toward mega-cap technology companies that pay no dividends or only token amounts relative to their market value.
What this means for portfolio strategy
The S&P 500's dividend yield is roughly one-fifth of what government bonds offer at 4.74%, giving income-focused investors an alternative to equity risk. The last time this few S&P 500 stocks outyielded the 10-year Treasury was mid-2007, which does not guarantee a repeat outcome but suggests such divergences tend to coincide with late-cycle dynamics.
Source: Crypto Briefing
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