As if it isn't telling enough that the dividend yield on the S&P 500 is higher than the 10 year Treasury yield, here's another sign that stocks are extremely cheap right now compared to bonds: the difference in the yield on a 23 year Procter & Gamble (PG) bond (quote via Scottrade) and the dividend yield on its equity is just 60 bps.
Unlike S&P 500 dividends and Treasury coupons, Procter's coupons and dividends are paid out of the exact same cash flow, which was $13.2B in 2011. Yet the relative price of Procter's debt vs. equity makes it look like these are securities from two totally different companies.
Source: Seeking Alpha
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