Bonds look very, very, expensive compared to stocks when focusing on their ability to generate income. Large Cap Stocks (the S&P 500) are now paying a higher dividend yield than the 10-year treasury.
This is very unusual. Since 1990, the treasury note / S&P 500 Dividend yield ratio has averaged 2.4. As stocks have a track record of dividend growth and a treasury bond has a fixed coupon payment, it makes sense that stocks should generate less income than bonds. However, something right now is not right!
Source: Learn Bonds
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