[Pops]

I don't know about earnings but dividend yield has been falling forever. Actually I know nothing about the market in general but it seems to me the corps are keeping the profits, not paying dividends and investors no longer care, they've been instructed to want to make a short term killing on the stock price instead of wanting their chosen company to actually be profitable for the long term.

Historically, the value of the market as a whole has been measured by comparing prices to earnings and to book value, while also considering dividend yield. Until the late-1980s, history showed that stocks were “cheap” when the market was selling near book value, with an average P/E ratio of about 10 or less, and yielding about 5% or more in dividends. Buying stocks when the market met two or more of those criteria – especially in line with key new highs in the Industrials and Transports – put the odds clearly in investors’ favor. On the other hand, investing when the market was selling at twice or more of its book value, with a P/E over 15, and yielding less than 3% was likely to bring losses. But all that started changing by the late-1980s.

market pe levels 1885 to 2013


Market P/E levels: For over 100 years until the 1990s, P/Es ranged between 5 and 25. Under the “new normal”, a P/E of 15 is cheap and God only knows what defines expensive! Source: Robert Shiller and his book Irrational Exuberance

dividend yield 1870 to 2013


Dividend yield: Meanwhile, dividend yields bounced around mostly between 3% and 8% for decades, but have remained under 3% for the last 25 years. Source: Robert Shiller and his book Irrational Exuberance

http://www.financialsense.com/contribut ... dow-theory

[dinopello]

Relative to interest you might pay on margin debt these days, dividends aren't that bad. I think sustained low interest rates and a generally positive outlook on the market future has built up the margin debt. I don't buy stocks with debt but if I did, I might be in a position to do it now.

[rockdoc123]

I think this is an issue you have to address by looking at sector performance rather than the market as a whole. As an example in the oil and gas industry a large percentage of the intermediates are trading at less than half of the cash flow per share multiples that were common a couple of years ago. I know of many smaller independents who have market caps close to cash on hand which is actually a ridiculous scenario. A number of these companies are churning out decent EBITDA without paying dividends so their P/E is actually pretty ugly. The companies are sound it is just the market isn't interested in what they are doing. Years ago someone made the comment "our boat is still intact and capable of floating, however someone pulled the plug in the bathtub!". The herd mentality in the markets can push them from one sector to another, often not based on underlying performance.

[Vogelzang]

Last time I added up all my wealth it was over $945,000. A lot of it came from the stock market. Many blue chip stocks, REITs, utilities, MLPs, etc. continually raise their dividends over time. I made over $17,000 in dividends outside of retirement in 2013. I'll be a millionaire pretty soon and will feel even more superior than I do now.