Capital Markets: Observations & Insights

Total Yield Compelling ​ Growth vs. Bond-like Equities

• Total Yield is the highest relative to corporate bonds in two decades

• Dividends + Share Repurchases = Total Yield

S&P 500 Dividend Yield S&P 500 Buyback Yield

Total Yield

S&P 500 Total Yield

Corporate Bond Yield

8%

12%

7%

Total Yield 5.5%

10%

6%

5%

8%

4%

Share Repo. 3.3%

6%

3%

4%

2%

Dividends 2.1%

Highest Spread

2%

1%

0%

0%

Apr-96

Apr-97

Apr-98

Apr-99

Apr-00

Apr-01

Apr-02

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-96

Apr-97

Apr-98

Apr-99

Apr-00

Apr-01

Apr-02

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Source: FactSet and Alger estimates as of 6/30/16. Corporate Bond Yield is Moody's Baa Corporate Bond Yield.

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