The Morningstar US Market Index‘s dividend yield in the first quarter of 2026 is below 1.2%—extremely low by historical standards. While yields are higher outside the US, the Morningstar Global Markets ex-US Index’s 2.6% dividend yield is also pretty paltry. Morningstar explains how investors can avoid dividend traps.
How Income Investors Can Avoid Dividend Traps in 2026
Morningstar
Dan Lefkovitz
Research
7 Pages
Key Takeaways
Low yields: US market dividend yield was below 1.2% in early 2026, which can push investors toward riskier high yield names.
Better signals: High payout ratios, weak or absent moats, and poor distance to default scores were presented as warning signs.
Total return matters: Chasing income alone can hurt both cash flow and principal when dividend cuts arrive alongside share price declines.
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