Aug 12, 2026
Follow us on Google for more Moneywise news
Add us on GoogleRetirees have long depended on dividend stocks for a reason: the payouts show up whether or not you sell a single share.
Unfortunately, that plan is now getting harder to pull off, because the S&P 500’s dividend yield has been running just above 1%, which is the lowest reading on record, according to Charlie Bilello, chief market strategist at Creative Planning.
Advertisement
The payouts themselves haven’t shrunk, but yield is dividends measured against price, and prices have climbed far faster than payouts. The index crossed 7,700 for the first time in early August and because it weighs companies by market value, it now leans heavily on megacap tech names that pay little or nothing.
Thanks for subscribing!
Invest smarter with our free newsletter.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
Steven Yedlin, a 75-year-old retired doctor in East Grand Rapids, Mich., has watched this happen in his own accounts. He told the Wall Street Journal (WSJ) that he built his portfolio around dividend ETFs and by the time he stopped working, his taxable account was split evenly between dividend funds and S&P 500 index funds.
“Not much you can do about the yields,” Yedlin said.
What he could do was change where the money goes. He shut off automatic reinvestment and the payouts now land in high-yield money-market funds — or he gives them to his kids.
Why the checks feel smaller
If, for instance, you have $500,000 sitting in a broad index fund, at today’s yield, that accrues roughly $5,250 per year for you in dividends. Then park the same amount in 10-year Treasurys, which currently yield about 4.65%, and you’d collect about $23,250 — more than four times as much.
And stock dividends no longer beat safe alternatives like Treasurys or CDs once taxes are accounted for, the WSJ reported. That stings most if dividend income is what you’re living on in retirement.
To be fair, dividend investors have had a strong stretch. High-dividend stocks beat the market on a total-return basis over the past year, according to the WSJ.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Dividends can disappear overnight
Papa John’s and UWM Holdings proved this possibility within two days of each other last week, scrapping their payouts. A dividend will last only as long as the board wants it to.
Advertisement
The pizza chain told the SEC on Aug. 6 that its board voted to suspend the quarterly dividend beginning in the third quarter, redirecting the cash toward franchise incentives, new point-of-sale technology and supply chain work. And looking closely, you’ll see that the decision came out of a rough quarter — revenue fell 8.8% to $482.4 million and North America comparable sales dropped 8.3% — with CEO Todd Penegor conceding the turnaround is “taking longer than anticipated.” The board says it will revisit dividends and buybacks once the strategy delivers.
In a similar vein, the parent of United Wholesale Mortgage reported an Aug. 5 second-quarter net loss of $451.9 million on $888 million in revenue, alongside a $2.05 billion investment from Oaktree Capital Management and SFS Group Capital, a vehicle owned by the family of CEO Mat Ishbia. That money came in as preferred stock carrying a 10% cash dividend — 13% if paid in kind. Shares fell about 35% the next day, CNBC reported.
Even when the checks from dividends keep coming, plenty of investors misread what those payments represent. Finance professors Samuel Hartzmark and David Solomon named the mistake the “free dividend fallacy”: treating a payout as bonus money layered on top of the share price. In reality, when a company pays $1 per share, the stock drops by roughly $1. Collect a $1,000 dividend or sell $1,000 of stock — once taxes and trading costs are counted, you’re in nearly the same place.
Chasing yield anyway has a price, Hartzmark told the WSJ. Those investors tend to end up less diversified, with bigger tax bills, holding dividend stocks they overpaid for.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
