The S&P 500 index is one of the most widely followed indices of the U.S. stock market. The index is made up of some of the largest companies in the world. These companies often have entrenched positions in their operating markets, and many of them can afford to establish regular dividend policies. However, the problem is that because everyone knows about the index, its components are always highly sought after. Due to the inverse relationship between dividend yield and stock price, S&P 500 companies are not really known as high yielders....
And the surge in the U.S. stock market over the last several years has only added fuel to the fire. Right now, the average dividend yield of all S&P 500 companies stands at just 1.75%. (Source: “S&P 500 Dividend Yield,” Multpl.com, last accessed August 30, 2018.) And that, my dear reader, is why L Brands Inc (NYSE:LB) stands out. The company was added to the S&P 500 index in September 1983 and has remained in the index ever since. And yet, it manages to offer investors an annual dividend yield of nine percent! In fact, L Brands is currently the second-highest-yielding name among all S&P 500 companies. The big question now is, should income investors chase this ultra-high yield?
Source: Income Investors
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