Capital Markets: Observations and Insights Autumn 2019

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Putting More Cash in Your Pocket Lending vs. Owning

LENDING vs. OWNING

• Equity dividend yields are now greater than 10-year Treasury yields, and stocks are likely to distribute 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

…But Stock Dividends Can Grow!

Similar Yields…

S&P 500 Div Yield 10-Yr Treasury Yield

S&P 500 Dividend Treasury Bond Coupon

10% 12% 14% 16%

10%

0% 2% 4% 6% 8%

-2%

Rolling 10-Yr Annual Growth

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018