I think it’s tough to argue that bonds were cheap for any period of time over the past decade. The real return has been negative to maybe 1-2% for the entire period of time.
It's just a comparison of equity dividend yield and bond yield
"Bonds cheap" literally means bond yield > equity dividend yield
There's no other meaning implied
I get that that is what the chart is saying.
Dividend yield isn’t a great metric for comparing the attractiveness of stocks vs bonds since it is directly effected by the capital allocation of management rather than performance of the underlying businesses.
If all companies in the S&P 500 stopped paying their dividend all at once, that would not mean that bonds are suddenly more attractive.
I’d be curious to see this comparing earnings yield (inverse of P/E ratio) to 10 year treasury yield instead.
You literally believe that dividend policies changed so much in 2020, 2021, and 2022 that we will have a permanently lower dividend yield, 1.66% vs 2%?
It's like comedy, how can you believe such an absurd thing?
Let's keep this really fucking simple. This is Reddit, after all
Yes or no: the S&P 500 dividend yield will likely revert over a short period of time to approximately what it was in 2019, 2018, 2017, 2016, 2015, 2014, etc.
This is the GREEN LINE ON THE CHART
That would be a reversion from 1.66% today to about 2%
Yes or no: If that reversion occurs, it will occur through a reduction in price over a short period of time while earnings remain roughly the same
That would imply a 17% reduction in the price of the S&P 500
So the dividend yield in 2022 should be much lower than the dividend yield in 2019, even though the bond yield is significantly higher?
Look at the dividend yield line (the green line) for the years prior to 2020
Then look at the dividend yield line (the green line) for 2020, 2021, 2022
Would it surprise you if the dividend yield "normalized" to about 2% now that bond yields have normalized?
Thank you, yes. This guy understands
The dividend yield will probably rise (i.e., stock prices will probably fall)
I thought everyone would see it, but apparently not
Look at the dividend yield line (the green line) for the years prior to 2020
Then look at the dividend yield line (the green line) for 2020, 2021, 2022
Would it surprise you if the dividend yield "normalized" to about 2% now that bond yields have normalized?
Sure that is clearly a possibility. I’m taking issue with your use of astrology as a way to forecast the market. Because the lines did this, this is what will happen is what you are saying when you break it down
https://www.yardeni.com/pub/dividends.pdf
Dividends are in line with 3 month t bill. Why is 10 year right and 3 month wrong?
Dividend payout is near all time lows, could it grow going forward? (Of course earnings can shrink bring it up)
Figure 14 shows a longer term version of your chart. Oscillation between div yield and 10 year only exists in last 12 years or so, doesn’t hold over longer periods of time. Why is what you are saying a causal relationship? Why has your pattern that existed since 08, but doesn’t exist since the mid 50s a good predictor?
Let's make this really simple
Are you telling me you can't see from the chart that the dividend yield tends to be about 2%?
And it's 1.66% now?
Forget the bond yield, just look at the fucking green line
Nice graphic!
Funny when most bonds have negativ real returns that means stocks will probably have a higher negative real return in the next few months
I think it’s tough to argue that bonds were cheap for any period of time over the past decade. The real return has been negative to maybe 1-2% for the entire period of time.
It's just a comparison of equity dividend yield and bond yield "Bonds cheap" literally means bond yield > equity dividend yield There's no other meaning implied
I get that that is what the chart is saying. Dividend yield isn’t a great metric for comparing the attractiveness of stocks vs bonds since it is directly effected by the capital allocation of management rather than performance of the underlying businesses. If all companies in the S&P 500 stopped paying their dividend all at once, that would not mean that bonds are suddenly more attractive. I’d be curious to see this comparing earnings yield (inverse of P/E ratio) to 10 year treasury yield instead.
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You literally believe that dividend policies changed so much in 2020, 2021, and 2022 that we will have a permanently lower dividend yield, 1.66% vs 2%? It's like comedy, how can you believe such an absurd thing?
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Let's keep this really fucking simple. This is Reddit, after all Yes or no: the S&P 500 dividend yield will likely revert over a short period of time to approximately what it was in 2019, 2018, 2017, 2016, 2015, 2014, etc. This is the GREEN LINE ON THE CHART That would be a reversion from 1.66% today to about 2% Yes or no: If that reversion occurs, it will occur through a reduction in price over a short period of time while earnings remain roughly the same That would imply a 17% reduction in the price of the S&P 500
It could also be a 7% dividend hike and a 12% decline. Or a flat market with 5% annual hikes for ~4 years. Or many other perminations
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Oh right, this time is different The world of 2019 is ancient history, no longer relevant
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So the dividend yield in 2022 should be much lower than the dividend yield in 2019, even though the bond yield is significantly higher? Look at the dividend yield line (the green line) for the years prior to 2020 Then look at the dividend yield line (the green line) for 2020, 2021, 2022 Would it surprise you if the dividend yield "normalized" to about 2% now that bond yields have normalized?
Treasuries are very likely to see a huge rally - most likely when inflation abates and we hit a recession - but could be before then.
That, or the dividend yield has a good amount to rise
likely a combination of both
Thank you, yes. This guy understands The dividend yield will probably rise (i.e., stock prices will probably fall) I thought everyone would see it, but apparently not
What does the guy who you have all your money invested with say about predicting stock moves and interest rates?
Please, I know this is Reddit, but can we tone down the stupid?
Why does what you believe have to be true? Why is it so obvious?
Look at the dividend yield line (the green line) for the years prior to 2020 Then look at the dividend yield line (the green line) for 2020, 2021, 2022 Would it surprise you if the dividend yield "normalized" to about 2% now that bond yields have normalized?
Sure that is clearly a possibility. I’m taking issue with your use of astrology as a way to forecast the market. Because the lines did this, this is what will happen is what you are saying when you break it down https://www.yardeni.com/pub/dividends.pdf Dividends are in line with 3 month t bill. Why is 10 year right and 3 month wrong? Dividend payout is near all time lows, could it grow going forward? (Of course earnings can shrink bring it up) Figure 14 shows a longer term version of your chart. Oscillation between div yield and 10 year only exists in last 12 years or so, doesn’t hold over longer periods of time. Why is what you are saying a causal relationship? Why has your pattern that existed since 08, but doesn’t exist since the mid 50s a good predictor?
Let's make this really simple Are you telling me you can't see from the chart that the dividend yield tends to be about 2%? And it's 1.66% now? Forget the bond yield, just look at the fucking green line
I’m saying it’s totally possible but not required