Introduction
The percentage of dividends as a part of personal income has steadily increased over time, making dividends an important source of income. Dividend income has climbed from 2.68% in Q4 1980 to 7.88% in Q2 2024, whereas interest income has declined from 14.58% to 7.61% over the same period (see Exhibit 1).
Since 1936, dividends have accounted for more than one-third of the total equity return of the S&P 500®, with capital appreciation making up the other two-thirds. Exhibits 2 and 3 illustrate the historical importance of dividends.
Index Design and Construction
The S&P 500 High Dividend Index measures the performance of 80 high-dividend-yielding companies within the S&P 500. The constituents of the S&P 500 High Dividend Index must be members of the S&P 500 and have an indicated dividend yield as of the rebalancing reference date. The index ranks in descending order the indicated dividend yield and selects the top 80 stocks with the highest dividend yield. The stocks are then equally weighted. The index is rebalanced semiannually in January and July.
