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.
Taobiz explains Dow Jones Industrial Average 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.
