S&P 500 dividend yields fall below 10Y Treasury note income, fewest stocks outyielding bonds since 2007

The income case for owning stocks just took a serious hit. The S&P 500’s dividend yield has sunk to roughly 1.05%, while the 10-year Treasury yield sits near 4.74%, creating a gap so wide it hasn’t looked this lopsided since before the global financial crisis. According to data from Ned Davis Research shared by analyst Liz Ann Sonders on August 20, only 3.85% of S&P 500 stocks now out-yield the 10-year Treasury. That’s the lowest ratio since May 2007. A decade-long reversal To appreciate how dramatic this shift is, rewind to July 2016. Back then, 63.4% of S&P 500 stocks offered higher yields than the 10-year Treasury. Fast forward ten years, and Treasury yields have normalized after the pandemic-era rate hiking cycle, while the S&P 500’s average dividend yield has been stuck below 2% since 2020. For much of 2026, it has hovered near or below 1.1%. Why dividends have shrunk The collapse in equity dividend yields isn’t entirely about companies cutting their payouts. It’s a cocktail of three ingredients, each reinforcing the others. First, valuations. The S&P 500 has climbed to levels where even steady dividend payments translate into tiny percentage yields. When a...