The table below lists the current and historical dividend yields by Sector, calculated using the 500 largest public U.S. companies. At the moment, the Energy sector and Utilities are providing the best yield for investors. However, using the dividend yield to compare the valuations different sectors is difficult as share buybacks have overtaken dividends as the main form of shareholder compensation especially among the Tecnology and Communications companies. The dividend yield of the U.S stock market as a whole is currently 1.50% (January 1st, 2024).
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Dividend Yields by Sector (Large Cap U.S. Companies)
| Sector | 12/31/2023 | 12/31/2022 | 12/31/2021 | 12/31/2020 | 12/31/2019 | 12/31/2018 |
|---|---|---|---|---|---|---|
| Communications | 0.77% | 1.10% | 0.83% | 1.00% | 1.19% | 2.58% |
| Consumer Discretionary | 0.76% | 0.76% | 0.62% | 0.85% | 1.28% | 1.66% |
| Consumer Staples | 2.71% | 2.60% | 2.41% | 2.55% | 2.68% | 3.25% |
| Energy | 3.90% | 3.63% | 4.11% | 5.95% | 3.87% | 3.70% |
| Financials | 1.81% | 2.13% | 1.76% | 2.17% | 2.07% | 2.26% |
| Health Care | 1.68% | 1.58% | 1.41% | 1.52% | 1.61% | 1.72% |
| Industrials | 1.66% | 1.68% | 1.38% | 1.65% | 1.86% | 2.32% |
| Information Technology | 0.76% | 1.16% | 0.78% | 0.95% | 1.25% | 1.66% |
| Materials | 1.96% | 2.13% | 1.63% | 1.77% | 2.02% | 2.21% |
| Real Estate | 3.42% | 3.48% | 2.24% | 3.03% | 3.09% | 3.63% |
| Utilities | 3.54% | 2.98% | 2.94% | 3.23% | 3.03% | 3.41% |
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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.