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UST Yields Vs. S&P 500 Dividend Yields

Published Tue, 25 Sep 2018 05:45:08 -0400 on Seeking Alpha

As interest rates have risen in the last year, we have seen a number of charts similar to the one below comparing the yield on the 3-Month US Treasury (UST) to the dividend yield of the S&P 500. For the vast majority of the current bull market (up until only a couple months ago) short-term interest rates have been below the dividend yield of the S&P 500. Since the FOMC began hiking rates over two years ago, short-term UST rates have risen. This year, they rose above the S&P 500 dividend yield; a key inflection point creating talk that the higher yield on cash makes UST more attractive than equities.

Relative to the current bull market, this may seem impressive. On a longer time horizon, though, this is not the case. Prior to 2009, instances where short-term Treasuries yielded less than the S&P 500 were few and far between. This cross in yields is by no means a red flag for equities, rather, it is a return to what has been historically normal.

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Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NUVEEN TAX-ADVANTAGED DIVIDEND GROWTH FUND 16.50   0.0 0.00 0.00 7.31
ISHARES DOW JONES SELECT DIVIDEND INDEX FUND 103.22   0.0 0.00 3.37 3.31
SPDR S&P DIVIDEND ETF 103.80   0.0 0.00 2.42 2.36
VANGUARD EXTENDED DURATION TREASURY ETF 137.28   0.0 0.00 0.00 2.29
VANGUARD DIVIDEND APPRECIATION ETF 120.84   0.0 0.00 0.00 1.58
ADAMS EXPRESS 15.95   0.0 0.00 0.20 1.27

NUVEEN TAX-ADVANTAGED DIVIDEND GROWTH FUND - JTD
NUVEEN TAX-ADVANTAGED DIVIDEND GROWTH FUND - JTD  


Older articles featuring Nuveen Tax-advantaged Dividend Growth Fund (JTD):
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Dividend Growth: Why It Matters
In The Wake Of Ex-Dividend
Income Investing And The Changing Yield Curve
Yield Hunter CEF Report March 2019: Distribution Cuts Pick Up, But So Do Increases
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