Capital Markets Summer 2020

II

More Cash in Your Pocket? Lending vs. Owning

• In an unusual occurrence, equity dividend yields are higher than 10-year Treasury yields

I

‒ The last time this occurred, stocks outperformed bonds by ~1,100 bps annually over the following five years* ‒ Over 10-year periods in the past half century, the S&P 500 dividend has grown an average of nearly 6% annually, while a Treasury bond coupon does not grow

II

…But Stock Dividends Can Grow!

Similar Yields…

III

S&P 500 Div Yield 10-Yr Treasury Yield

S&P 500 Dividend Growth

10% 12% 14% 16%

12%

10%

8%

IV

6%

0% 2% 4% 6% 8%

4%

2%

V

0%

-2%

Rolling 10-Yr Annual Growth

VI

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

Source: FactSet, Robert Shiller, Alger. *S&P 500 returned 17.6% vs. 6.6% annually for the Ibbotson U.S. Long-Term Government Bond Index 11/30/08-11/30/13. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

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