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• My high-yield stock watchlist

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• The Highest Yielding Dividend Aristocrats

Today is Dividend Day.

The series where I teach you 5 things about dividend investing in less than 5 minutes.

1️⃣ S&P 500’s record low dividend yield

There’s been a shift in the S&P 500 over the past few decades.

Before the 1990’s, the minimum dividend yield of the S&P 500 was about 3%.

Since then, it’s only crossed above 3% at the bottom of 2008 crash.

Today the dividend yield sits barely above 1%, around the same level as at the peak of 2000 dot com bubble.

Source: Multipl

2️⃣ If you’re not buying income, what are you buying?

The S&P 500’s profit margins are very high right now.

Source: DQYDJ

But the dividend yield above shows that when you buy the S&P 500, you’re not buying a very big slice of those profits.

What are you buying?

Increasingly, you’re buying the Magnificent 7, and AI-related companies.

Source: Motley Fool

And the hyperscalers are now spending more on CapEx than they make in Free Cash Flow.

Source: MUFG

When you buy the S&P 500, you’re placing a large bet on the future of AI.

3️⃣ An Investing Quote

I think today’s market looks similar to the market during the dot com bubble.

In his 2000 Chairman’s Letter, Warren Buffett reminded us about the dangers of heavily betting on an uncertain future.

The market is betting that there will be a lot of birds in the bush.

Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.).

The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.” To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be?

Here’s a sample of headlines about Warren Buffett from the 1999/2000 era.

4️⃣ You’ll also soon be buying SpaceX

SpaceX could go public this month in an IPO.

Its market cap is expected be around $1.5 trillion, and indexes are expected to make rule changes to allow SpaceX to be included much sooner than would be typical.

That means that people holding S&P 500 or NASDAQ 100 ETFs will likely soon be buyers of SpaceX.

The company released its S-1 filing a few weeks ago, and it had some interesting information.

• SpaceX is unprofitable: In 2025 SpaceX had $18.7 billion in revenue but had a $4.9 billion net loss

• It’s complex: SpaceX includes the rocket company you think of, Starlink (satellite internet), and xAI

• Starlink is the best business (for now): In 2025, Starlink had $11.4 billion in revenue, and it’s profitable

• AI Spending is Very High: In the first quarter, SpaceX spent $1 billion on space, $1.3 billion on Starlink, and $7.7 billion on AI

You can read the entire filing here.

Source: Krane Shares

5️⃣ Example of a Dividend Stock

Today’s example Dividend Stock has nothing to do with AI, a dividend yield 3x the S&P 500, and is profitable now.

Ingredion is a supplier that turns grains and plants into the starches, sweeteners, and textures used in thousands of everyday packaged foods.

The company earns steady profits by supplying these essential ingredients to major global brands and has slowly increased its dividend over time.

Key numbers from Fiscal.ai:

• Profit Margin: 9.5%

• Forward P/FCF: 13.7x

• Dividend Yield: 3.3%

• Payout Ratio: 31.3%

Source: Fiscal.ai

P.S.

If you'd rather own a slice of predictable cash flows than gamble on the AI hype cycle, I have something special coming your way.

On June 23rd, we are kicking off a series all about high yield investing.

If you want to maximize your portfolio’s income without sacrificing business quality, jump on the VIP Waitlist.

You’ll get behind-the-scenes updates and the very first invite to download our brand-new high-yield special reports the minute we go live.

Don’t forget that you’ll also get the following just for joining the VIP list:

• My high-yield stock watchlist

• A Checklist of Dividend Investing Mistakes

• The Highest Yielding Dividend Aristocrats

Used sources

• Interactive Brokers: Portfolio data and executing all transactions

• Fiscal.ai: Financial data

Disclaimer

As a reader of Compounding Dividends, you agree with our disclaimer. You can read the full disclaimer here.