Dow Jones Industrial Average (DJIA) Yield

AAA

DEFINITION of 'Dow Jones Industrial Average (DJIA) Yield'

The aggregate dividend yield on the 30 stocks that make up the Dow Jones Industrial Average. The DJIA yield is calculated by adding the dividends of all 30 component stocks, dividing the result by the price-weighted DJIA index value and factoring in the Dow multiplier. Generally, the DJIA yield is used as a trading indicator by investors, as yields below 3\% are considered a selling signal and yields above 6\% are considered a buying signal.

INVESTOPEDIA EXPLAINS 'Dow Jones Industrial Average (DJIA) Yield'

The trading indicator function of the DJIA yield has not held form in the most recent bull market period, as the DJIA Yield has remained below 3% since the early 1990s.

The gradual downtrend in yields found in the DJIA tends to reflect the change in company mix. The DJIA is no longer a purely industrial index; today's DJIA contains healthcare, technology and financial companies, which traditionally pay lower dividend rates than mature, industrial-based stocks.

VIDEO

RELATED TERMS
  1. Yield

    The income return on an investment. This refers to the interest ...
  2. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  3. Dow Jones Industrial Average - ...

    The Dow Jones Industrial Average is a price-weighted average ...
  4. Dow Jones Transportation Average ...

    A price-weighted average of 20 transportation stocks traded in ...
  5. Dogs Of The Dow

    An investing strategy that consists of buying the 10 DJIA stocks ...
  6. Price-Weighted Index

    A stock index in which each stock influences the index in proportion ...
Related Articles
  1. How Now, Dow? What Moves The DJIA?
    Bonds & Fixed Income

    How Now, Dow? What Moves The DJIA?

  2. Barking Up The Dogs Of The Dow Tree
    Investing Basics

    Barking Up The Dogs Of The Dow Tree

  3. How To Create A Modern Fixed-Income ...
    Investing Basics

    How To Create A Modern Fixed-Income ...

  4. The Dow Jones Industrial Average
    Investing

    The Dow Jones Industrial Average

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center