I've realized with surprise that some people on iTulip don not have a clear idea how S&P dividend yields and rates are calculated. In order to correct this deficiency I think it would be interesting to debate the issue, because a correct understanding is essential for assessing the effects of inflation for the real value of our portfolio.

According to S&P documentation:

Cash Dividend Yield. Standard & Poor’s multiplies the cash dividends per share recorded for each index constituent by the shares outstanding for that constituent in order to arrive at a gross amount of cash dividends paid. It then adds these over a period of 12 months and divides the sum by the end-of-period market capitalization of the index.
Basically the sum of dividends over the last year (12 months) are divided with the S&P value of the day of calculation.

Some may be confused about this simple methodology believing the indicated dividend represents some king of "on the spot" or "right now" value:
http://www.itulip.com/forums/showpos...9&postcount=71
Originally posted by Finster
Indicated dividends are not the same as "trailing 12-month dividends", which I specifically distinguished above. The former - and the ones I cited - are the current dividend annualized. Not a sum over a full year.
According to commonly used English language "indicated dividends" are:
http://www.investorglossary.com/indicated-dividend.htm

The indicated dividend is the estimated cash dividends a stock will pay in the next four quarters, based on what it paid in the most recent period. Stock tables commonly include the indicated dividend to tell investors the annual cash return they can expect from payouts of earnings; the indicated dividend can then be compared with returns from other securities, like bonds. In the Wall Street Journal stock tables, the indicated dividend comes directly after the stock name; in Barron's tables, the indicated dividend is in the last column. While the indicated dividend is based on what the stock paid in the most recent quarter, be aware that companies declare dividend rates for varied time-spans. Thus the indicated dividend rate in a stock table may reflect the declared dividend rate for the company's most recent quarterly, six-month, or annual period.
Or in another basic economic knowledge site:
http://www.investorwords.com/2432/in..._dividend.html

The total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend.
Or the basic definitions of Investopedia:
http://www.investopedia.com/terms/i/...eddividend.asp

What Does Indicated Dividend Mean?
The total dividends that would be paid on a share of stock throughout the next year if each dividend is the same amount as the previous payment.
Investopedia explains Indicated Dividend
For example, if General Motors paid a dividend of $0.50 in each of the four quarters last year, the indicated dividend suggests they will pay that same $0.50 in each of the four quarters in the subsequent year.

This is a rough forecasting technique and is usually represented by the letter "e" in stock tables.
Some may believe that the exact meaning of the definition is just a technicality, bot if one fails to understand basic markets concepts, there is a danger of wasting a lot of time in creating nice charts that can be as full of meaning as reading the economic future in chicken entrails.

It also can create a sudden jump in blood pressure and lead to premature closing of threads (in anger) when running out of arguments

In order to get to a very sophisticated level we have first to have a good understanding of the basics ....