S&P 500 Earnings Yield - Yardeni Research

S&P 500 Dividend & Earnings Yield

Yardeni Research, Inc.

November 24, 2021

Dr. Ed Yardeni

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Table Of Contents Table Of Contents

S&P 500 Earnings Yield

3-11

November 24, 2021 / S&P 500 Dividend & Earnings Yield

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S&P 500 Earnings Yield

Figure 1.

15

S&P 500 DIVIDEND YIELD vs CPI INFLATION RATE & STOCK MARKET CYCLE

10

S&P 500 Dividend Yield

Nominal* (1.38)

Real** (-3.91)

5

0

15

10

5 Q3

0

-5

-5



-10

-10

47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* S&P 500 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 500 index. ** Nominal dividend yield minus CPI inflation rate on y/y basis using quarterly data based on 3-month averages.

Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor's and Bureau of Labor Statistics.

Figure 2.

25

25

S&P 500 REPORTED EARNINGS YIELD* vs CPI INFLATION RATE**

20

20

15

S&P 500 Earnings Yield*

15

Nominal (4.50)

Real** (-0.84)

10

10

5

Q3 5

0

0

Q3

-5

-5

-10 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 deleted because of negative value. ** Nominal earnings yield minus CPI inflation rate on y/y basis using quarterly data based on 3-month averages.

FN3 Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor's and Bureau of Labor Statistics.

-10

15 20 25

Page 3 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

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S&P 500 Earnings Yield

Figure 3.

12

S&P 500 REPORTED EARNINGS YIELD* MINUS CPI INFLATION RATE**

9

12 Latest (-0.84)

9

6

6

3

3

Average 3.19

0

0

Q3



-3

-3

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of large negative value. ** Year-over-year percent change in three-month average of each quarter.

Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas are bull markets. Source: Standard & Poor's and Bureau of Labor Statistics.

Figure 4.

14 US EQUITIES REPORTED EARNINGS YIELD* MINUS CPI INFLATION RATE**

Latest (-0.63) 14

12

12

10

10

8

8

Average = 4.9

6

6

4

4

2

2

0

0

Q2



-2

-2

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Ratio of after-tax corporate profits as reported to the IRS divided by market value of US equities traded in the US excluding foreign issues. ** Year-over-year percent change in quarterly using three-month averages.

Note: Shaded red areas denote S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Federal Reserve Board.

Page 4 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

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S&P 500 Earnings Yield

Figure 5.

20

20

REAL EARNINGS YIELDS

18

18

16

16

14

Real Earnings Yields

14

All Equities

12

Less Foreign** (-0.63)

12

S&P 500* (-0.84)

10

10

8

8

6

6

4

4

2

2

0

0

QQ23

-2

-2



-4

-4

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* After-tax corporate profits as reported to the IRS as a percent of market value of US equities traded in the US excluding foreign issues minus CPI inflation rate (y/y in quarterly using 3-ma). ** S&P 500 reported earnings as a percent of quarterly average S&P 500 index minus CPI inflation rate (y/y in quarterly using 3-ma). Q4-2008 dropped because of negative value. Note: Shaded red areas denote S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Federal Reserve Board, Standard & Poor's, and Bureau of Labor Statistics.

Figure 6.

20

20

S&P 500 REPORTED EARNINGS YIELD*

(as a percent of quarterly average S&P 500 index, annual rate, nsa)

15

15

10

10

5

5

Q3

0 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of negative value. Source: Standard & Poor's.

0

15 20 25

Page 5 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

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S&P 500 Earnings Yield

Figure 7.

1830

1530 S&P 500 INDEX DIVIDED BY CONSUMER PRICE INDEX (ratio scale)

1230 930

630

330

1830 Oct 1530

1230 930

630

330



30

30

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

Source: Standard & Poor's and Bureau of Labor Statistics.

Figure 8.

25

25

S&P 500 REPORTED EARNINGS YIELD*

vs CPI INFLATION RATE**

20

20

15

S&P 500 Earnings Yield (4.50)

15

CPI Inflation Rate (5.34)

10

10

5

Q3 Q3

5

0

0

-5 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of negative value. ** Year-over-year percent change in three-month average of each quarter.

Source: Standard & Poor's and Bureau of Labor Statistics.

-5

15 20 25

Page 6 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

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S&P 500 Earnings Yield

Figure 9.

12

S&P 500 REPORTED EARNINGS YIELD* MINUS CPI INFLATION RATE**

9

12 Latest (-0.84)

9

6

6

3

3

Average 3.19

0

0

Q3



-3

-3

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of large negative value. ** Year-over-year percent change in three-month average of each quarter.

Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas are bull markets. Source: Standard & Poor's and Bureau of Labor Statistics.

Figure 10.

20

20

S&P 500 REPORTED EARNINGS YIELD*

vs US TREASURY 10-YEAR BOND YIELD

15

15

S&P 500 Earnings Yield (4.50)

US Treasury 10-Year Yield (percent) (1.32)

10

10

5

5

Q3

0

52

57

62

67

72

77

82

87

92

97

02

07

12

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of negative value. Source: Standard & Poor's and Federal Reserve Board.

0

17

22

27

Page 7 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

Yardeni Research, Inc.



S&P 500 Earnings Yield

Figure 11.

10

S&P 500 REPORTED EARNINGS YIELD* MINUS US TREASURY 10-YEAR BOND YIELD

5

0

10

5 Q3

0

-5

52

57

62

67

72

77

82

87

92

97

02

07

12

* S&P 500 reported earnings as a percent of quarterly average S&P 500 index. Q4-2008 dropped because of negative value. Source: Standard & Poor's and Federal Reserve Board.

-5

17

22

27

Figure 12.

310

S&P 500 REPORTED EARNINGS / CONSUMER PRICE INDEX* 260 (dollars per share, annualized, ratio scale)

210

160

110

Q3 310 260 210 160

110

60

60



10

10

35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25

* S&P 500 reported earnings divided by consumer price index (three-month average of each quarter). Q4-2008 dropped because of negative value. Source: Standard & Poor's and Bureau of Labor Statistics.

Page 8 / November 24, 2021 / S&P 500 Dividend & Earnings Yield

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