Low Dividend Yields Are Another Stock Market Warning Signal. As stock prices rise, obviously dividend yields decrease as a percentage of the price you would pay. It is worth pointing out that over the last 100 years, half of the returns in the stock market have come from dividend yields. So, it follows that low dividend yields historically have been warning signs a correction is coming as stocks become less interesting for dividend-seeking investors looking to maximize returns. As you can see from the chart below, dividend yields are way down to 1.80%. That makes stock prices way too high for investors seeking income through dividends.
Over the last 100 years, half the return in the markets have come from dividends. When the market got hit in the spring it was one of the highest dividend yields in the last decade at 2.7%. However, those bargains are long gone as we now are in the lower ranger where the stock market struggled to move higher.