How Much of the S&P 500's Return Actually Came From Dividends vs. Price Appreciation, by Decade
Key Points
With the current yield on the S&P 500 hovering around 1%, many investors consider dividends an afterthought.
Corporations' preference for buybacks over dividends has contributed to this.
A look back at S&P 500 dividends over the past century is a helpful metric.
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There are two components to an investment's total return: price return and dividend return. Add those together, and you get the total return.
Most people who invest in the S&P 500 (SNPINDEX: ^GSPC) treat the dividend as a footnote. Since the current yield on the Vanguard S&P 500 ETF is only 1%, it's understandable.
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That hasn't always been the case, though. Over the past century, dividends have provided roughly one-third of the total return for the S&P 500. On a decade-by-decade basis, however, that number has fluctuated wildly.
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S&P 500 dividends: A decade-by-decade breakdown
Here are the annualized price, dividend, and total returns for the S&P 500 for each decade going back nearly 100 years.
| Decade | Annualized Price Return | Dividend Return | Total Return | Dividends as Percent of Total Return |
|---|---|---|---|---|
| 1930s | (4.68%) | 4.55% | (0.05%) | >100% |
| 1940s | 4.39% | 4.86% | 9.17% | 53% |
| 1950s | 14.93% | 4.52% | 19.35% | 23% |
| 1960s | 4.39% | 3.43% | 7.81% | 44% |
| 1970s | 1.60% | 4.30% | 5.86% | 73% |
| 1980s | 12.59% | 4.97% | 17.55% | 28% |
| 1990s | 15.31% | 2.86% | 18.21% | 16% |
| 2000s | (2.72%) | 1.82% | (0.95%) | >100% |
| 2010s | 11.22% | 2.35% | 13.56% | 17% |
| 2020s* | 13.33% | 1.76% | 15.08% | 12% |
Data source: SlickCharts. *2020s figures are annualized using data from 2020-2025 only.
Starting in the 1990s, dividends became a much smaller component of total returns. Yields were steadily falling, and large-cap stocks have spent much of this century yielding less than 2%.
- 1990s: The S&P 500 had its best decade in terms of price gains, thanks to the run-up to the tech bubble. A 2.9% annual return from dividends was meaningful, but largely an afterthought amid the tech boom.
- 2000s: This decade featured both the dot-com bust and the financial crisis. Those combined to make the 2000s a lost decade for the S&P 500. A modest dividend yield turned out to be the only positive return investors saw, although it wasn't enough to offset price declines.
- 2010s: Finally returning to some balance. Dividends provided a reasonable, though not large, contribution to total returns. More importantly, there were no catastrophic bear markets. 2018 was the only year with a 20% decline, and it recovered within months.
- 2020s so far: The COVID-19 pandemic sent stocks down, but they recovered quickly and then some. It's been the artificial intelligence (AI) boom ever since.
Part of the reason that yields have come down is the emergence of stock buybacks as a means of returning value to shareholders. Tech companies, in particular, have become known for doing this. A few of the larger companies pay significant yields, and we're likely to see the low equity dividend yield trend continue for some time.
But dividends aren't irrelevant. In the next bear market, you'll probably be thankful you have them.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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