From the pandemic era of ultra-low interest rates to today's paltry payout from major companies, it feels like income-focused investors can't catch a break. For those unwilling to move entirely into bonds, it's time to think outside the box -- or in this case, the index.

At present, the S&P 500's dividend yield is 1.04%, which is "effectively its lowest level...in history (including back-testing)," Sevens Report President Tom Essaye wrote Friday. That record surpasses even the 1.09% it had fallen to during the peak of the dot-com bubble of the late 1990s and early 2000s, when tech companies' hyper-growth hype dominated the index and dividends were viewed as stodgy and out of fashion.

Of course, the S&P 500 is partly a victim of its own success. It's climbed more than 13% since the start of the year and recorded 28 new all-time closing highs in 2026. When prices go up, yields go down.

However, that's cold comfort to seniors and other investors who depend on dividends -- and for many years were right to do so.

Historically, the S&P 500 has sported an average dividend yield of 4.2%, Essaye notes, and it's not just seniors who should be concerned about the decline, given that over time, "dividends have materially contributed to an investor's total return" in the past. He cites data from Hartford Funds, which found reinvested dividends and the power of compounding accounted for 85% of the S&P 500's cumulative total return since 1960.

Translated into dollars, that means $10,000 invested in the S&P 500 in 1960 would have grown by 2025 to roughly $1.14 million without dividends, or $7.58 million with dividends reinvested. So the gains from dividends aren't small potatoes.

Still, investors don't have to give up hope entirely, even when excluding super-high-yielding exchange-traded funds (possible "yield traps") and dividend growth ETFs, which tend to have yields not much higher than the index.

Essaye highlights the SPDR Portfolio S&P 500 High Dividend ETF, the iShares Select Dividend ETF, the Schwab U.S. Dividend Equity ETF and outside U.S. equities, the iShares International Select Dividend ETF, and iShares Emerging Markets Dividend ETF. All five yield at least three times as much as the S&P 500's current level and use leverage or derivatives either minimally or not at all.

That may not be as easy as buying and holding the index, but investors ignore the power of dividends at their own peril.