The S&P 500 is the most widely cited single gauge of large-cap equities on U.S. stock exchanges. Standard & Poor’s estimates that more than $7.8 trillion is benchmarked to the index, making it one of the most influential figures in the world of finance. To be included, a company must be publicly traded in the United States and report a market capitalization of $5.3 billion or greater.
The dividend yield indicates how much a company pays out in dividends each year relative to its share price. In other words, it measures how much “bang for your buck” you are getting from dividends.
In the absence of any capital gains, the dividend yield is effectively the return on investment for a stock. The lower the dividend yield, the less you get for your investment, and hence the more overvalued a stock.
The historic S&P 500 Dividend Yields were deducted by Robert Shiller and published in his book Irrational Exuberance.