The decline in dividend yields may be attributed in part to Merton H. Miller, who died in early June.
The idea that dividend policy doesn't matter in the value of a corporation's stock price was one of the famous theorems pioneered by Miller and Franco Modigliani.
"When he wrote that (with Mr. Modigliani), the magnitude of dividends (in yield) was 4% to 6%," said Eugene M. Lerner, president of Disciplined Investment Advisors Inc., Evanston, Ill. "Now dividends are somewhere around 11/2% to 2%."
"As long as a firm earns more than the cost of its capital, shareholders are better off the more a firm retains of its earnings," rather than paying them out in dividends, added Mr. Lerner, who is also a professor of finance at the Kellogg Graduate School of Management, Northwestern University, Evanston.
Mr. Miller, who was a professor emeritus of finance at the University of Chicago's Graduate School of Business, co-wrote with Mr. Modigliani "Dividend Policy, Growth and the Valuation of Shares," which was published in 1961.
In fact, the dividend yield on the Standard & Poor's 500 stock index, as of June 9, was 1.13%, which may be one of the lowest in at least 50 years, according to Carol Levine, communications manager for index services at Standard & Poor's.
By comparison, as of Dec. 31, 1990, it was 3.66%. In 1980, on the same date, it was 4.54%; in 1970, 3.41%; in 1960, 3.35%; and in 1950, 7.2%.