Time Frame: Long
Category: Fundamental

Description

The dividend yield is one of the oldest and most respected measures of the stock market's value. It is the yield which the collective dividends of the S&P 500 would return based on the current price of the S&P 500 Index. As the dividend return on stocks decreases they become less attractive or more overvalued. This indicator calculates the dividend rate of return relative to fixed income investments because they both compete for investors seeking a consistent nominal return.

Calculation & Significant Levels

S&P 500 Dividend Yield vs. T-Bills: Three-month T-Bill yield divided by the S&P 500 Dividend Yield. Above 2.1 is considered bearish and below 1.8 is bullish.

Formula:                (T-Bill Yield)
         -----------------------------------------------
          (S&P 500 Dividends)/(S&P 500 cash index price)

Gauge Elements: Magnitude
Updated: Weekly (as of Friday close)

Strategy