#MARKETS & INVESTING
The third of US stocks paying the highest dividend yield returned 11.32% a year from July 1927 onwards. Those paying no dividend at all: 9.47%. A gap of 1.85 points a year — which vanished after 2000, then reversed.
Published on September 1, 2026 · to be rechecked on September 1, 2027
The calculation runs on the "Portfolios Formed on D/P" series from Kenneth R. French's data library, rebuilt each June on the CRSP database. Over the 99 years from July 1927 to June 2026, the highest-yielding third returns 11.32% a year, or 40,932 times the stake; companies paying no dividend, 9.47% a year, or 7,758 times. Five times less, for an annualised volatility of 28.0% against 19.6%. But the gap is not a constant: since January 2001 the two groups have returned the same thing (9.57% against 9.26%), and since 2011 the order has reversed — 12.85% for high yielders, 14.02% for non-payers.
Does a high dividend yield signal a company in trouble?
Across a century of US data, no: those stocks returned more, and with fewer shocks. Across the last quarter-century, however, the advantage has disappeared.
In other words: a high yield was never the alarm signal it is described as — but it is no longer the premium it once was.
Five caveats, because they matter
- The sort is on dividend yield, not on company quality. A high yield can come from a generous dividend or from a collapsed share price: the portfolio holds both.
- The result reverses depending on the window. Across the 89 rolling ten-year windows since 1928, high yielders beat non-payers in only 64% of cases — from +13.86 points a year over 1981-1990 to −7.52 points over 1990-1999.
- The portfolios are capitalisation-weighted and rebalanced once a year. They ignore transaction costs and taxation, which weigh especially heavily on a dividend strategy, taxed every year.
- The "no dividend" bucket does not hold the same thing in 1930 and in 2026: it is now dominated by technology companies reinvesting their earnings, a profile almost absent from the original sample.
- This is US data, in dollars. No conclusion follows mechanically for the French or European market.
Why it still matters: a high yield is not in itself a distress signal; but the historical dividend advantage cannot be read in the last twenty-five years.
For you
- Which window is the dividend-stock performance you are shown built on: the whole century, or the quarter-century in which the gap disappeared?
- If high yielders and non-payers have returned the same thing since 2001, what justifies choosing between them?
Source: reproducible Ze Finance calculation on the "Portfolios Formed on D/P" series from Kenneth R. French's data library (Tuck School of Business, Dartmouth), June 2026 CRSP vintage — monthly value-weighted returns, July 1927 to June 2026.
View the source →