Another month, another all-time high … and another drop in yields on dividend stocks.
No one’s complaining about price appreciation, that’s for sure. After stumbling out of the gate, the S&P 500 is up 5.5% for the year, crossing the psychologically reassuring level of 1900 for the first time and now charging toward 2000.
But as we’ve noted before, barring a huge increase in dividends paid, rising stocks prices mean lower yields on dividend stocks. Indeed, the market’s dividend yield stands at 1.93%, down from 1.96% a month ago — and 2.07% at this time last year.
Lower yields on dividend stocks pose a couple of risks. For one thing, anyone putting new money to work in dividend stocks is doing so at those now-lower yields. The other risk is that as yields on dividend stocks come down, they become less competitive vs. other sources of income, such as bonds.
Fortunately, there are some bright spots to falling yields on dividend stocks. The bond market is rising, meaning yields on fixed income are also falling. And, best of all, there are still plenty of dividend stocks in the S&P 500 throwing off fat yields.
Even after hitting new highs, the benchmark index includes dividends stocks yielding anywhere from about 5% to more than 10%.
To get a sense of what’s out there among high-yield dividend stocks, here are the top 10 S&P 500 dividend stocks for June. (Note: All dividend yields are as of market close June 6.)