The table below lists the current and historical dividend yields by GICS Sector, calculated using the 500 largest U.S. companies. The dividend yield of the U.S stock market as a whole is currently 1.55% (1/31/2021). Note: The yield for the Communications sector is calculated for the previous Telecommunications sector before 12/31/2018. This explains the large difference in the yield between 12/31/2018 and 6/30/2018.
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CAPE Ratio by Sector (Large Cap U.S. Companies)
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Dividends & Buybacks
Paying dividends is not the only way for public companies to reward their shareholders. Another way to provide value for stockholders is for a company to purchase back its own shares and reducing the total number of shares outstanding in the company. This will increase the earnings-per-share of an individual share which should drive the price of the remaining shares higher. Most of the large public U.S. companies are paying both dividends and doing buybacks.
The main difference for shareholders between dividends and share buybacks is taxation. Dividends are taxable income and taxes need to be paid always when dividends are received. Share buybacks increase the price of a stock and there is no need to pay any taxes until an investor sells her shares (at a profit).
As buybacks have become a more important method for shareholder compensation for many sectors, the traditional dividend yield does not necessary offer a full picture of how companies distribute their profits. The percentages below combine the total dividend paid and the total buybacks of the past 12 months, thus creating a total shareholder compensation yield for a sector (calculated for 12/31/2020). The difference between the dividend yield and total shareholder compensation yield is especially large tor the IT and the Communications sectors.
• Industrials: 2.99%
• Consumer Discretionary: 1.90%
• Information Technology: 3.20%
• Consumer Staples: 3.55%
• Materials: 2.83%
• Energy: 7.23%
• Real Estate: 3.33%
• Financials: 5.71%
• Communication Services: 3.29%
• Health Care: 2.93%
• Utilities: 3.65%