Income-starved investors are faced with bleak prospects. Stocks in the S&P 500 index might only reward investors with a dividend yield of 2% or so over the next 12 months. As an alternative, investors could consider 10-year Treasury notes, but those pay even less. Based on history and very long-term charts, stocks do seem like the better choice. Prior to 1951, stocks offered investors more income than bonds. Read More
Income-starved investors are faced with bleak prospects. Stocks in the S&P 500 index might only reward investors with a dividend yield of 2% or so over the next 12 months. As an alternative, investors could consider 10-year Treasury notes, but those pay even less. Based on history and very long-term charts, stocks do seem like the better choice. Prior to 1951, stocks offered investors more income than bonds. As you can see in the chart below, something changed in 1951, and bond yields topped dividend yields for the next 60 years. In November 2011, the relationship reverted back to its historical alignment, and stock market yields have been at least slightly above bond yields ever since. This relationship is important to income investors because asset allocation rules have been developed based on the data. Many retirement investors have learned that a balanced portfolio should be 60%… Read More