Capital Markets: Observations & Insights

IV

Putting More Cash in Your Pocket Lending vs. Owning

• Equity dividend yields are nearly as high as 10-year Treasury yields, while stocks are likely to distribute much more cash to investors over time ‒ Over 10-year periods in the past half century, the S&P 500 dividend has grown an average of nearly 6% annually or over 70%, while a Treasury bond coupon does not grow

I

II

Similar Yields…

…But Stock Dividends Can Grow!

S&P 500 Div Yield 10-Yr Treasury Yield

S&P 500 Dividend Treasury Bond Coupon

III

10% 12% 14% 16%

10%

8%

6%

IV

0% 2% 4% 6% 8%

4%

2%

0%

V

-2%

Rolling 10-Yr Annual Growth

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

VI

Source: FactSet, Robert Shiller, Alger.

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