Capital Markets: Observations and Insights Autumn 2019

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%

8%

6%

0% 2% 4% 6% 8%

4%

2%

0%

-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

Source: FactSet, Robert Shiller, Alger.

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