ThickenMyWallet writes a post comparing and discussing yields of dividend paying stocks and bonds that includes references to the recent stock market recovery and the context in which yields can be compared.
"The conventional pre-1950’s thinking was that, given that equities are, by nature, a riskier investment class than fixed income, equity needed to pay out greater than fixed income returns to over-come the structural risk. After all, why would you invest in something without some cash being returned to you over the life-time of your investment (oh, how times have changed!)? Since anyone could purchase U.S. treasury note with guaranteed payment, dividend yields needed to be greater than treasury yields to entice investors to invest in equities."
See Source:
How Annuities Work
7 hours ago
1 comments:
he makes a good point.
the risk/reward model of stocks vs. bonds is largely a myth.
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